Data breaches are up significantly in 2019, exposing billions of confidential records and costing companies millions of dollars on average per breach. Security experts counsel their clients that data breaches are inevitable as even the largest, most secure systems may be breached. In spite of this environment, many tech companies are woefully unprepared to respond to a cyber intrusion, data breach, or other cyber-related event. Are you ready?

As insurance coverage lawyers, we often work with clients to confront this organization-wide challenge after a breach has occurred. The better approach, however, is to prepare in advance by understanding your risks, building a team, securing and monitoring your data, having a well developed and rehearsed response plan, and tailoring your insurance program to a possible breach. Additionally, having counsel involved throughout the preparation and response process is critical to protect privilege, minimize legal liability, and maximize insurance coverage. 
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Title III of the Americans with Disabilities Act (ADA) provides that

No individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation.

42 U.S.C. Section 12182(a). What about a website? Is that a “place of public accommodation”? The answer to that question could make a big difference in determining whether your business faces legal risks and whether you can protect against those risks with insurance. A recent decision out of the Ninth Circuit highlights the split in United States jurisdictions about whether a website is subject to the prohibitions against discrimination found in the ADA. 
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Emerging tech companies face many uncertainties. On the one hand, it’s an exciting environment with eager investors and an expanding market receptive to new high-tech solutions. But there are also risks from cyber disruption, potential product liability claims, and less than trustworthy vendors. Don’t get caught without adequate protections.

Indemnification agreements. Carefully drafted indemnity provisions in your contracts with vendors and other third parties, including suppliers and large customers, can go a long way to protecting your business against various risks that are out of your control. When a claim arises, you will want the indemnitor to step in to address issues as seamlessly as possible. Close attention to the details of your agreements is critical. Don’t rely on standard form provisions that are not tailored to your business. If a dispute arises, you will want to make sure, for example, that you are not bogged down by unfavorable choice-of-law or dispute-resolution provisions. These should be addressed in advance. Keep in mind that an indemnity agreement is only as good as the indemnitor who signs it. If the indemnitor is insolvent or unwilling to step up, then your business is on its own. Insurance is the only way to provide that additional security.
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Welcome to The Perkins Coie Tech Risk Report, a source for updates on, and analysis and interpretation of, insurance issues relevant to emerging technologies. We will address coverage issues related to cyber coverage, privacy, digital assets like cryptocurrency, Blockchain and other emerging technologies. The blog is written for start-ups and other companies dealing with emerging

Smart contracts are changing the way businesses conduct routine transactions to make them more efficient and, in many ways, less prone to human error. But this new technology has associated risks. Is your company adequately prepared?

Basics of Smart Contracts

Smart contracts, sometimes known as self-executing contracts, are contracts that are written in computer code and connected to a blockchain so that an individual or entity can instantly be bound to the terms of the contract. Computing devices may also be bound via a smart contract, which has led to the Internet of Things. 
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Many contracts require that parties be added as “additional insureds,” but few contain specifics on what type of coverage should be provided. The gambit of additional insured provisions is far-ranging. Being proactive and ensuring that the additional insured coverage you are expecting is actually provided on the front end will eliminate a host of issues should you need to invoke coverage under the provision.

Additional insured coverage is normally provided by endorsement, at times listing specific entities or individuals and at other times providing blanket coverage for all that require it via contract. In theory, being included as an additional insured provides protection as if your company was a named insured on another’s policy. In reality, however, there are many variations of additional insured coverage that often contain restrictions on the rights of additional insureds under the policies. 
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In the fast-paced world of tech startups and business planning, you might not even consider whether your insurance policies could be yanked out from under you. After you have secured basic insurance to protect yourself and your assets against loss and liability, can your insurance company cancel your coverage at any time? Surprisingly, under some circumstances, the answer is yes. But you can protect against this with some advance preparation.

For some forms of insurance—like health, life, auto or homeowner’s insurance—there are statutory limitations on an insurance company’s right to cancel. But, it’s a different story for commercial insurance, purchased to protect your business assets and executives. 
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Does your business model include a “protection plan” for customers that pays them for damages caused by your services?  This can be an attractive component of your business and a way to reassure your customers. The protection is typically an easy value add-on in the apps that customers access via the internet or mobile devices. But because your business is agreeing to indemnify against loss arising from a contingent or unknown future event, does that subject it to restrictions on selling insurance?

The regulation of insurance is done on a state-by-state basis, and different states have different definitions of when a business must obtain a license to sell “insurance.”
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If your company uses vendors, you’re likely already familiar with vendor contracts. General provisions in the contracts, such as timing and delivery requirements, are well known, but did you know that inadequate insurance requirements in vendor contracts could put your company at risk? Learn the important, but frequently missed, insurance provisions that should be in all vendor contracts.

Your vendor contracts should clearly state the types of insurance your vendors must obtain before doing work with your company, including the minimum limits of liability that you expect the vendors to carry. Common types of insurance required of vendors are Commercial General Liability (CGL) insurance, Cyber Risk insurance, Professional Liability/Errors and Omissions (E&O) insurance, Automobile Liability insurance and Workers’ Compensation insurance. 
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