FAQs about Professional Indemnity Insurance for Digital Professions:
Scope

Professional Indemnity for Digital Professions is generally aimed at self-employed, freelancers and service providers who work in the IT, media and creative industries or in consulting. The online premium on the exali.com website is valid up to an annual net turnover of 3.000.000 euros. Due to the principle of blanket coverage for your profession, all activities in the three areas that are not explicitly mentioned in one of the exclusions are insured. The following list of insured activities is therefore only an example:

Engineering Activities (optional, if selected)

Hardware and software development for machines and systems, embedded software, machine and system testing, commissioning support, quality management and assurance, technical drawing and design (CAD, CAM), technical management consultancy (in particular purchasing, strategy, process design), technical expert.

Professional Indemnity Insurance for Digital Professions is based on the “all-risk principle”. This means that all liability risks in the field of activity of a freelancer or company are insured, unless they are mentioned in the exclusions. It is not necessary to list the insured risks (a so-called coverage catalogue) as is the case with conventional general liability insurance.

This has enormous advantages if you have changing areas of activity and risks due to project-dependent work. The risks listed below are therefore only examples:

1. Insured Risks towards Third Parties (e.g. Customers or Principals)

• Damage caused by incorrect programming, consulting, organisation or training
• Compensation for unsuccessful installation (e.g. implementation and integration damage) of your manufactured or delivered software
• Damage that occurs before the client has released or accepted the service
• Damage caused by insufficiently tested products and services
• Damage caused by incorrect data acquisition, data processing and storage
• Damage caused by poorly or incompletely executed orders, so-called consequential damages (no exclusion for compensation instead of performance!)
• Compensation for non-performance of a contractual obligation
• Compensation for negligence in contract negotiations
• Compensation for late delivery or service (exceeding the deadline)
• Damage caused by business interruptions suffered by your customers
• Damage caused by lost sales or profits suffered by your customers
• Unsuccessful expenditures or investments by your customers in anticipation of proper performance
• Damage due to no-fault deviations from the agreed quality (e.g. within the framework of service level agreements)
• Damage caused by the violation of copyrights, license rights, domain rights, trademark rights, naming rights and personal rights as well as data protection laws (also in the USA/Canada)
• Claims due to data protection violations, breaches of confidentiality and non-disclosure agreements as well as unfair competition and unfair advertising
• Warnings and claims for compensation due to publications for own products and services (e.g. incorrect legal notice or product description)
• Damage caused by material defects in hardware manufacture
• Poor execution by your subcontractors
• Compensation for damages as a result of data theft and information piracy by third parties
• Negligent transmission of, for example, viruses, worms, Trojans
• Loss, injury or damage to documents or data
• Damage related to web design, web hosting, internet providing

2. Insured First-party Claim Risks (Damage that you yourself suffer)

• First-party claims caused by changing or blocking of your own website (e.g. hacking damage)
• Replacement of lost, own, written documents for order processing,
• Costs for loss of your own domain caused by a third party (domain legal protection)

3. Optional Insurable Risks

• Your first-party damage in connection with hacker attacks, DoS attacks, computer misuse, theft of data carriers or devices as well as other data rights violations (First-Party Cyber and Data Risks Insurance)
• Damage caused by faulty engineering services such as hardware and software development for machines and systems, embedded software, machine and system testing, commissioning support, technical drawing and desigen (CAD, CAM) technical management consultancy (in particular purchasing, strategy, process design), technical expert (Engineering Activities)

As with every insurance contract, certain exclusions and limitations of benefits apply to this contract, including:

• Claims due to knowing breach of duty, in particular knowingly deviating from laws, regulations or instructions of the principal.
  That means you are not insured if you intentionally – i.e. knowingly – violate contractual agreements or laws (slightly or grossly negligent violation of, for example, the rights of third parties is of course insured).
• Claims due to fines, warnings and individually agreed contractual penalties
  That means you are not insured if the contractual penalty agreed between you and the customer is higher than the actual damage.

• Provision of the owed service, subsequent performance and improvement (whereby the customer’s claim for compensation due to non-performance / poor performance is fully insured!)
  That means you will not receive any reimbursement of your wages or your fee if you have not yet completely performed the service agreed with the customer.
• Infringement of patent rights in the United States (however, infringement of copyright, e.g. by infringing a source code, is insured!)
  Note: Software is usually not patentable in Europe!
• Special costs for product recall
  However, claims for compensation from third parties due to a defective product (e.g. hardware or software) are insured.

Example of Limitations of Benefits:

• Compensation will only be paid if the liability claim or first-party claim exceeds the agreed deductible.

In professional indemnity insurance, activities in the military sector and for the arms industry are not generally excluded as in other professional indemnity and general liability insurance. You therefore also have insurance coverage if you carry out projects for the arms industry (e.g. the armed forces).

There is only one restriction for the area of "weapon systems": For claims for deliveries and services for weapon systems, insurance coverage exists within the scope of the policy for pure financial loss, but not for personal injury or property damage.

In Professional Indemnity Insurance for Digital Professions, activities in connection with the planning, construction, manufacture or delivery of aircraft or spacecraft, including the control and monitoring of air or space traffic, are not completely excluded as in other professional indemnity and general liability insurance.

When you carry out projects in this area, you have insurance coverage for pure financial losses. However, personal injury and property damage are not covered by the insurance.

Yes, the insurance covers activities in the automotive area (e.g. automotive industry, automotive supplier), as there are no special exclusions in the insurance conditions. However, the online questionnaire asks about activities in this area so that the insurer can assess the individual risk.

Professional Indemnity Insurance for Digital Professions not only insures claims based on statutory liability, but also based on “contractual liability”. The insurer also provides insurance coverage for damages and compensation of unsuccessful expenses or lost profit:

• due to negligence in contract negotiations;
• due to non-performance or poor performance of a contractual obligation, or the breach of an ancillary contractual obligation;
• due to damage caused by delay, unless this is based on an intentional or grossly negligent incorrect assessment of the technical, logistical, financial or human resources available;
• due to claims for compensation, if there is no fault-independent liability for the deviation from the agreed quality (within the framework of, for example, service level agreements) of goods, deliveries or services.

Yes, subsidiaries in-country and in countries of the European Economic Area (EEA) are insured without being named.

Professional Indemnity Insurance for Digital Professions insures all damage for which a claim is made against you for the first time during the contract period (if you were not yet aware of the damage at the time the contract was signed). This also applies if damage was caused before the start of the contract and the claim is reported for the first time after the start of the contract.

Yes, Professional Indemnity Insurance for Digital Professions insures all consequential damages such as claims for compensation, reimbursement of unsuccessful expenditures and lost profit:

• due to negligence in contract negotiations
• due to non-performance or poor performance of a contractual obligation, or the breach of an ancillary contractual obligation;
• due to damage caused by delay (in the case of gross negligence, the compensation can be reduced in proportion to the severity of the policyholder’s fault);
• due to claims for compensation, if there is no fault-independent liability for the deviation from the agreed quality (within the framework of, for example, service level agreements) of goods, deliveries or services.

The insurance covers insured events in which the insured person is notified of the damage event during the term of the insurance contract (“claims-made theory”). If this is the case, damage can still be reported up to 5 years after the end of the insurance contract (extended reporting period).

If your Professional Indemnity Insurance for Digital Professions has been terminated due to the permanent abandonment of the insured activity, damage events that are reported to the insured up to 5 years after the end of the insured activity (and are reported to the insurer within the extended reporting period) are also insured.

The change of corporate from (e.g. from a sole proprietorship to a corporation, regardless of the legal form) is completely unproblematic and possible without additional contributions. Due to the change of corporate form, the policyholder named in the insurance policy will be changed. This is what is known as a policyholder change. To do this, it is sufficient if you change the new company name and the current credit card details directly in the “My exali” customer area.

All managing directors and employees (employed or freelance) of the new company are automatically insured free of charge through Professional Indemnity Insurance for Digital Professions.

Keep in Mind:

The liability of the executive bodies of corporations, for example the managing director of an public corporation, is not automatically insured.

If the company is registered as a policyholder, there is automatically also insurance coverage for insured activities that are performed by you as managing director of the company (or other managing directors) in your own name outside the company.

In the annual report, your turnover as a freelancer/self-employed person must be disclosed and added to the turnover of the company.

Professional Indemnity Insurance for Digital Professions insures not only third-party damage but also certain damage that you suffer yourself (so-called first-party claims). This includes:

Changing or Blocking of Your Own Website

If your website has been changed or blocked by a hacker, the insurer bears the costs of reversing the change or blockage.

Loss of Written Working Documents

The insurance covers the replacement of lost written (including electronic) working documents that you need to complete orders.

Domain Protection Insurance

The insurance covers the costs for loss of your own domain name rights or the power of disposal over your own homepage caused by third parties.

This special add-on protects your business from the incalculable risks of a hacker attack, a DoS attack or other Internet crime (cyber crime).

Cyber & Internet Crime – the New Risks

As many advantages as the internet age and technologies such as cloud computing or SaaS offer, they have also opened new opportunities for hackers and criminals to abuse these new technologies.

And in our experience, it’s not only large corporations that fall victim to hacker attacks and unauthorised spying, but also smaller IT companies, agencies and freelancers.
Violations of data rights can also have a completely different cause, for example if a device or data carrier on which sensitive data is located is stolen or lost. The consequences are no less critical.

First-Party Cyber and Data Risks Insurance (FPC) Protects Your Business

The insurance covers first-party claims related to hacker attacks, DoS attacks, cyber extortion, computer abuse, theft of media or devices, and any other data infringement. For example costs in connection with the restoration or repair of your IT systems, the commissioning of external computer forensics analysts or specialised lawyers (including criminal defence) as well as crisis management & PR.
Additional costs for the quick elimination or avoidance of an interruption to your business are also insured.

The following damage is insured by the first-party cyber and data risks insurance:

• Hacker damage to your own IT systems
• First-party data rights claim (in particular spying on personal data)
• Expenses for an (imminent) interruption in business (additional cost coverage)
• Breach of trust damage (intentional damage to own IT by employees)

Specialty: Assumption of Costs and Crisis Management

The special thing about this add-on module is the assumption of your own costs, e.g. for the commissioning of:

• Computer forensics specialists
• Specialized lawyers
• Consultants to provide information to data owners
• Credit protection and monitoring services

The aim is to get you and your customers out of the dangerous situation with as little damage as possible

Insured Sums and Deductibles

You can choose between 50.000 euros, 100.000 euros or 150.000 euros per insurance year as the insured sum in the exali.com premium calculator. The deductible per insured event is 1.000 euros.

The optional Add-on Engineering Activities (ENG) extends the insurance cover by engineering services.

Insured engineering activities

The Engineering Insurance provides blanket coverage. This means that all engineering services are covered without the need for an exhaustive list in the insurance terms and conditions. The activities listed in the "Engineering" endorsement are therefore merely illustrative examples:

• Hardware and software development in the field of machines and systems, embedded software
• Machine and system testing, support for commissioning process
• Quality management and assurance
• Technical drawing and design (CAD, CAM)
• Technical management consulting, in particular purchasing, strategy, process design, technical expert activities

Requirements for Engineering Insurance

As the scope of activities is very broad due to blanket coverage, insurance cover can only be provided under these conditions:

• You are providing services and support but are not responsible for the final result.
• You are not responsible for the final engineering product, systems, machines or other parts.
• You provide the engineering services in a supporting and/or advisory capacity.
• No machines, plants, final engineering products or other parts shall be put into series production directly and without approval and acceptance by the principal (keyword: final sign-off).

Benefits of Engineering Insurance

The special thing about this add-on module is the assumption of your own costs, e.g. for the commissioning of:

• Very comprehensive coverage including
  • legal & contractual liability
  • project delays & loss of profit
  • breach of confidentiality obligations & data protection laws
  • Pre-insurance coverage
• Projects with "mixed" activities (engineering & IT/ICT) also insured
• No clause for insufficient experiments or testing
• No "state of the art" clause
• No exclusion in the PI coverage for defence and aerospace risks

Insured Sums and Deductibles

The sum insured for the engineering activitis are the same as the insured sum you selected in the premium calculator for the financial loss liability between € 300,000 and € 3,000,000 and for the general liability between € 2,000,000 and € 10,000,000. Note: the provided insured sums are triple aggregated per insurance year.

The deductible for financial losses is the same as selected in the online calculator.

• Engineering Activities (ENG)

In principle, Professional Indemnity for Digital Professions offers worldwide coverage.

Unrestricted insurance coverage exists for financial losses that are asserted in courts of the United States or are based on the violation of the law of these states.

For personal injury, property damage and the resulting financial loss asserted in US courts or based on a violation of US law, insurance coverage is only provided in the following cases:

1. When participating in or carrying out business trips
2. When participating in trade fairs, exhibitions or events
3. Indirect export * of products or services to the US

The legally binding formulations can be found in the agreed contract conditions.

The deductible for property damage and financial loss is 250 euros per damage event. There is no deductibel for personal injury.

Different Deductibles for Optional Add-ons

The deductible for the First-Party Cyber and Data Risks Insurance (FPC) add-on is 1.000 euros per damage event.

We developed the Professional Indemnity Insurance for Digital Professions and the online rate offered on exali.com in close cooperation with the financial loss insurer Markel in Munich. As an international specialty insurer, Markel has decades of experience in insuring against professional risks.

Special Rate for exali.com Customers through Markel

The team of underwriters and product specialists at Markel in Munich has an excellent reputation. Since 2013, we have been insuring freelancers and self-employed people from the IT, media and consulting sectors with a special coverage concept at particularly favourable conditions through Markel.

The know-how and the service in claims processing are excellent. This is due on the one hand to the experience in the international insurance market and on the other hand to the focus on special risks such as IT experts, consulting professions, media agencies and service providers.

Since we as a tied insurance agent are increasingly confronted with the need for global insurance protection for our customers, Markel, with its international expertise and the worldwide insurance protection it offers, is the first choice for us.

Background Information on the Insurer Markel

Markel (Insurance SE), based in the Bavarian capital Munich, is a German insurer with origins in the USA. As a specialty insurer for commercial and industrial risks, Markel has many years of experience in dealing with complex risks.

The insurer Markel, which also includes Markel’s own Syndicate 3000 (insurer at Lloyd’s of London), is an international specialty insurer that currently writes a premium volume of around $ 9.5 billion (as of 2020).

Markel currently operates in 37 locations around the world, e.g. in England, Spain, the Netherlands, Sweden, China and Hong Kong, Kuala Lumpur, Singapore, Malaysia, the USA and Canada. Markel is licensed as an insurer in all European countries, in 47 states of the USA as well as the District of Columbia and the US Virgin Islands.

Overview of Facts and Figures About Markel

• Founded in 1930 by Sam A. Markel
• Premium volume (2020): $ 9.5 billion
• Market value: over $ 10 billion
• Employees worldwide: 18,600.
• Financial strength rating: Markel Insurance SE
• A.M. Best: A (Excellent)