In general, three types of damage can be distinguished in indemnity insurance for risks:
In contrast to other sectors (e.g. the craft or manufacturing industry), financial loss is of central importance in the field of digital professions because most cases involve damage of this type.
1. Financial Loss
Financial loss occurs in situations in which neither a person nor a thing suffers direct damage, but financial loss is caused to another person through culpable behaviour.
A distinction is made between “real” financial loss and property damage or consequential damage to persons as “unreal” financial loss.
Real financial losses are not insured through conventional general indemnity insurance.
1.1 Pure Financial Loss: Examples
Data loss: Due to an incorrect backup, customer administration data cannot be restored.
Copyright infringement: A trademarked image is accidentally used when building a website.
System failure: An IT service provider updates the antivirus software for a customer from the manufacturing sector. After the installation, the customer’s IT system (220 workstations) collapses. The compensation claim was for 100.000 euros.
1.2 Consequential Financial Loss: Examples
Server overheating: Incorrectly setting up the server in a call centre can result in overheating and damage to the server (property damage). The server must be replaced and set up again. The call centre cannot process any orders during this time. The loss of sales and profit at the call centre is a consequential damage (consequential financial loss).
Hardware failure: Incorrect connection of several hardware components can lead to overheating and damage to a newspaper printing press (property damage). The next newspaper issue cannot be printed and delivered on time (consequential damage).
2. Property Damage
Property damage often occurs as damage associated with an activity. This means a third-party item belonging to the client incurs damage when the service is provided.
The mainboard is damaged during server maintenance work in a tax office. The workstations cannot be used for a day and a half.
You accidentally spill coffee on your client’s laptop and the device is defective.
3. Personal Injury
Although personal injury plays a subordinate role in many projects, there are jobs in which such damage can occur. That’s why personal injury also needs to be covered through professional indemnity insurance for digital professions.
Your customer comes to your office for a kickoff meeting, trips over a cable lying around and breaks his arm in the process.
In a storm, an unsecured chair on your roof terrace flies over the railing and injures a passerby.