IT-related financial loss cover for machine constructors

Very few people would ascribe intelligence to a screw – but digitisation in machine construction is transforming even the smallest material parts into major decision-makers. Suddenly even the lowly screw itself is able to indicate when reserves are low, or a production system is coordinating a manufacturing process on its own. Industry 4.0 – the current phase of the Industrial Revolution – makes this possible. Machines and processes are intelligently networked by means of information and communication technology. Processes can be significantly optimised, whether that occurs with data exchange, remote maintenance or resource planning. 

Progress is risk

Digitisation is only rarely limited to a company alone; rather its reach can be felt across big data applications, cloud solutions or special software right to the customer.

But who is responsible for damages when digital errors lead to a third party’s operations being interrupted, for example? In the case of IT companies, the situation is clear: customers’ financial losses are covered by corresponding IT liability insurance. But there is an insurance gap in the machine construction sector. ‘Companies can normally call on their public and products liability insurance when third-party claims arise,’ explains Jan Timmermann, head of the Liability industrial area at Funk. ‘But purely IT-related financial losses are not covered here – so they are quickly becoming a risk of digitisation.’

In order to prevent that the fear of a claim turns progress into an enemy, Funk offers special IT financial losses cover. As an add-on to extended product liability, it is especially aimed at providing insurance cover for machine construction companies that also offer software and IT services for their own and third-party machines as part of their core expertise. After all, if faulty software or the wrong delivery shuts down a customer’s production, the final end customer is not affected yet.

Protection for the future

Nevertheless, data losses or operational downtime can still have severe consequences for manufacturers and buyers. For example, the offer from Funk covers losses incurred as a result of viruses, malicious software or hacker attacks in an external company, but also damages related to the deletion of data or disruption of data organisation. The insurance cover is completed with protection against operational interruptions and the resulting loss of earnings.

Timmermann summarises: ‘If you’re using intelligent technologies, you should get intelligent insurance as well – so that digitisation does not become a financial tripping hazard.’ He recommends that companies adapt that product liability insurance soon. That way, machine constructors can remain successful in a networked future.

08.01.2020