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How Tech Illiteracy Could Cost You Thousands

How Tech Illiteracy Could Cost You Thousands

The Aereo case shows that judges don't understand basic IT. Tech-illiterate judges could cost you thousands in a IT lawsuit. Here's how to cover your business.

Friday, July 11, 2014/Categories: cloud-insurance

During the recent Supreme Court hearing over Aereo, the Internet-streaming TV service, it became clear that the Supreme Court (and the legal system in general) knows very little about technology. Embarrassingly little.

This revelation came out in the courtroom, where justices expressed shock that some people had more than one cell phone. Salon suggests that these problems are inherent to the way the legal system works.

Rulings are made based on examples from the past – you know, legal precedent – but current IT works by making old technology irrelevant. Can you really make laws based on the technology that has just been replaced? Or worse, based on technology that was replaced several innovation cycles ago?

What the Supreme Court's Aereo Decision Means for Small-Business Liability

Unfortunately, because new technology is so fundamentally different than old, justices are forced to base their decisions on past examples involving entirely different technology.

This problem isn't just academic. Imagine that your business is sued and the judge makes a ruling about your mobile app based on a case that applied to landlines or telegraphs. If that seems strange, it's not. Regulations were removed for landline phones only after judges found a legal precedent involving railroads. Seriously.

We're seeing this problem with ridesharing services, such as Uber and Lyft, as well. Lawmakers are unsure whether these services should be regulated in the same way that taxis are. (For more about how lawmakers are struggling with mobile app liability, see "Technology vs. Laws: Rideshare Edition.")

The law works in strange ways as it tries to make rulings about new technological frontiers. Let's take a closer look at what this means for small-business liability and how you can manage your IT risk.

How to Protect Your Business from Lawsuits When the Law Won't

Imagine this scene: you're sued for SaaS code you've written. The judge keeps making jokes about "the cloud" and how no one understands it.

Because your software can't be downloaded, the judge decides to base the ruling on past lawsuits for service businesses. Of course, lawsuits in the service industry have nothing to do with cyber liability and data security, but this doesn't bother the judge, who's stilling chuckling about "the cloud."

Unfortunately, this example isn't far-fetched at all. During the recent hearings, Justice Kennedy thought that "trolling" was a fishing technique. We're not sure if he meant "fishing" or "phishing." And we're not sure which mistake is worse.

When judges are tech-illiterate, you need to protect your business from the cost of a lawsuit. Because the law can't adapt to rule accurately about new technology, it's smart to invest in IT insurance that covers your business if you're sued.

The nice thing about small business insurance is that it pays for lawsuits regardless of whether you win or lose. It pays regardless of whether you actually make a mistake or if a client is suing you unfairly.

What Kind of Insurance Protects IT Businesses from Software and Tech Lawsuits?

Professional Liability Insurance (also called E&O Insurance) can pay for a tech lawsuit filed against your IT firm. Every IT firm has "professional liabilities," which is the phrase the law uses to refer to the obligations you have to clients. When you don't fulfill these responsibilities or a client alleges you haven't, Professional Liability Insurance covers the lawsuit.

You can be sued for…

  • Missed deadlines.
  • Software flaws.
  • Data security issues / data loss / security breaches.
  • Identity theft.
  • Latency / poor performance.
  • Compatibility problems.

Even if you have a judge who doesn't understand what the cloud is, you can rest assured that your insurance agent will. TechInsurance's agents specialize in IT liability. Whether you need database administrator insurance or mobile developer insurance, our agents can build a policy that covers your tech liabilities.

For a free quote on Professional Liability Insurance for IT, submit an online insurance application.

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