Software in the 90’s is a “tangible”, a “good”, and no longer considered an intangible, or service. The insurance implications for software professionals are ominous!
Any software specialist having been insured under a $250.00 comprehensive property, liability, and lost income package saw that program disappear as well known cases like Magnetic Data, Inc. v. St.Paul Fire & Marine Insurance Co.1 begin to alert wary underwriters.
In the Magnetic Data case, the consequences and insurance provisions responding to an accidental erasure of data were under consideration for the first time. Property Damage provisions of a basic small business package described above might have been forced to respond to a situation never contemplated for the premium charged. While Magnetic Data never ultimately did decide the tangibility matter, Retail Systems, Inc.v. CNA Insurance Companies2 did declare software as tangible. Thus ended an inexpensive insurance vehicle for the software industry!
1 442 N.W. 2d 153 (Minn.1989)
2 469 N.W. 2d 735 (Minn. 1991)