by Michael Werneburg
Today I had an illuminating call with our insurance broker and carrier about an exclusion in our errors &omissions insurance pertaining to unlicensed data and software.
The intent of the terms was to absolve a carrier in case someone performs an audit and discovers that you've got something unlicensed in use. But they confirmed my reading of its broad language to include other cases, such as:
1. A claim for other purposes (e.g. data breach) where it turns out that unlicensed software or data is in the mix. The presence of that unlicensed IP would mean the insurer would not cover a claim. In our case, we're good here.
2a. A similar case comes up that involves software for which there is no license because the software is now unsupported by its publisher but for which no current licensed. This software is still in use for some "business reason", and the system is otherwise properly maintained. This would not cause an exclusion. So again, we're good.
2b. Something comes up involving a system that has no license because it's become unpatchable despite the availability of current alternatives. In this case, the insurance company wouldn't cover a claim, because the insured hasn't done its part in keeping current. "Technical debt" makes itself felt yet again.