Crowd-stuck: Weathering the Next Global IT Outage

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Friday’s widespread IT outage – affecting companies using Microsoft products – caused industries from aviation to energy to come to an abrupt halt.

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Unlike AT&T’s recent data breach, this incident was allegedly not the result of a cyber attack. CrowdStrike, a widely used cybersecurity vendor, simply pushed out an update containing a bug that caused millions to see the infamous "blue screen of death."

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There's a temptation to think that incidents like CrowdStrike could be covered by business insurance policies like cyber liability coverage. After all we’re talking about damage to digital infrastructure, right? 

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The reality is that tech companies need an array of business insurance to fully mitigate risks from IT outages. Koop specializes in providing business insurance for technology companies; we’ve outlined the types of policies businesses can adopt that would help the most when the next IT outage inevitably happens.

Technology Errors & Omissions (E&O) Insurance

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While not the result of a cyberattack, CrowdStrike's recent outage could have resulted from an employee error (e.g. deploying a bug within a routine software update). That’s exactly the kind of situation E&O insurance was created to cover: professional negligence. But E&O goes beyond negligence to cover an array of situations including:

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• Misrepresentation: Allegations that a company provided misleading information about their services or products.

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• Errors in Documentation: Claims resulting from mistakes in reports, records, or other documentation provided to customers.

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• Missed Deadlines: When a company fails to meet a critical deadline that impacts a client’s business, leading to financial loss or other damages. 

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The breadth of scenarios covered by Technology E&O makes acquiring it a low-cost solution to several regularly occurring risks. 

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Business Interruption Insurance

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Today’s outage has caused businesses like airlines to temporarily suspend operations. Every minute service companies can’t operate has a financial cost that interruption insurance is designed to cover. Interruption Insurance claims typically fall into four categories:

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• Lost Income: Replaces the income the business would have earned had the interruption not occurred. This is usually calculated based on past financial records and future projections.

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• Operating Expenses: These include fixed costs such as rent, utilities, and payroll that the business must continue to pay even while operations are halted.

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• Temporary Relocation Costs: If the business needs to move to a temporary location, the policy can cover the expenses associated with the move and operation from the new location.

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• Extra Expenses: Any additional costs that the business incurs to continue operations during the interruption, such as renting equipment or outsourcing work, may also be covered.

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So while business interruption can be costly, it doesn’t have to be, with policies often covering 100% of lost income and required operating expenses.

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Tech E&O and business interruption are just two of the policies tech companies can benefit from when there’s a widespread IT outage. Other policies like General Liability and Product Liability are easy recommendations for companies making the cutting-edge products we use daily. 

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Koop’s customer assurance platform helps tech companies seamlessly navigate the complexities of business insurance, regulatory compliance, and security automation in one place.

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We provide a comprehensive suite of insurance coverage that includes General Liability, Technology Errors & Omissions, Cyber Liability, and Management Liability coupled with the most cost-effective SOC 2 compliance certification on the market.

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Ready to learn more? Visit our website at https://www.koop.ai or drop us a note at hello@koop.ai.