HISCOX IT PI V1 04/05

The General Terms and the following terms and conditions all apply to this section.

The activities shown in the schedule, which you perform in

the course of your business.

Any software, hardware, firmware, cabling or electronic

equipment.

Costs incurred with our prior written agreement to

investigate, settle or defend a claim against you.

Also includes any person who was, is or during the period of

insurance becomes your partner or director or senior

manager in actual control of your operations.

If during the period of insurance, and as a result of your business activity within

the geographical limits for clients, any party brings a claim against you for:

a.

breach of a written contract to design, produce or supply deliverables due to:

i.

the deliverables either not conforming in all material respects with any

written specification that forms part of the relevant contract and where it

is an express term of the contract that the deliverables must comply

with that specification;

ii.

the deliverables containing a material defect;

iii.

the deliverables failing to meet any implied statutory term concerning

necessary quality, safety or fitness,

b.

negligence or breach of an express or implied contractual duty to use

reasonable care and skill,

c.

negligent misstatement or negligent misrepresentation,

d.

infringement of intellectual property rights including copyright, trademark or

moral rights or any act of passing-off, including any liability you have for

infringement of intellectual property rights under an indemnity in a written

contract with your client for the supply of deliverables,

e.

defamation,

f.

dishonesty of your individual partners, directors, employees or self-employed

freelancers directly contracted to you and under your supervision,

we will indemnify you against the sums you have to pay as compensation.

We will pay defence costs but we will not pay costs for any part of a claim not

covered by this section.

HISCOX IT PI V1 04/05

If your client has reasonable grounds for being dissatisfied with the work you have

done, refuses to pay for any or all of it, including amounts you legally owe to sub-

contractors at the date of the refusal, and threatens to bring a claim against you for

more than the amount owed, it may be possible to settle the dispute with the client by

your agreeing not to press for the disputed amount. If so, we will pay you the

amount owed to you at that time if we believe that this will avoid a legitimate claim for

a greater amount and we have given our prior written approval to settling in this way

and for this amount.

Alternatively, if it is not possible to reach agreement with the client on this basis but

we still believe that by not pressing for the disputed amount you will avoid a

legitimate claim or counterclaim for a greater amount, we will pay the amount owed

to you at that time. If a claim is still brought, we will deal with it but our total

payment, including what we have already paid you or on your behalf, will not exceed

the applicable limit of indemnity shown in the schedule. You must return the amount

we have paid if you eventually recover the debt less your reasonable expenses.

Once we agree to make this payment you will assign to us such rights as you have

in relation to the amounts owed to you.

We will not make any payment for any part of a claim not covered by this section.

If during the period of insurance any document, information or data of yours which

is necessary for the performance of your business activity is lost, damaged or

destroyed while in your possession, we will cover you against the cost of restoring

or replacing it.

We will not make any payment for any claim or loss directly or indirectly due

to:

1.

any financial advice you give or the arrangement of any finance or credit.

2.

a.

any inherent defect in any deliverables which are supplied by or

originate from a third party;

b.

any failure or default by a third party to supply any service.

3.

counterfeit goods including software, unless obtained from a source specifically

approved by the originator of the goods.

4.

your operation or administration of any pension or employee benefit scheme or

trust fund, or the sale or purchase of or dealing in any stocks, shares or

securities or the misuse of any information relating to them, or your breach of

any legislation or regulation related to these activities.

5.

the infringement of any patent.

6.

breach of confidence or misuse of any information or infringement of any right

to privacy.

7.

the work of any contract worker supplied by you to a client.

HISCOX IT PI V1 04/05

8.

any obscenity, blasphemy or pornographic material.

9.

your insolvency or your financial difficulties.

10. your breach of any taxation, competition, restraint of trade or anti-trust

legislation or regulation.

11. any pollution or contamination, including noise, electromagnetic fields, radiation

and radio waves.

12. transmission by you of a computer virus, worm, logic bomb or Trojan horse.

13. any virus, worm, logic bomb or Trojan horse written or created by you, your

employee or any self-employed freelancer directly contracted to you and under

your supervision.

14. any virus, worm, logic bomb or Trojan horse which indiscriminately replicates

itself and is automatically disseminated on a global or national scale, or to an

identifiable class or sector of users.

15. the death or any bodily or mental injury or disease suffered by anyone.

16. anyone's employment with or work for you, or any breach of an obligation

owed by you as an employer or any kind of discrimination, harassment or

unfair treatment.

17. the ownership, possession or use of any land or building, any animal, any

aircraft, watercraft or any motor vehicle.

18. the loss, damage or destruction of any tangible property. This does not apply

to claims for documents in your care, custody or control in connection with a

business activity for a client or to your own loss under the cover for loss of

documents in WHAT IS COVERED.

19. the loss, damage or destruction of any bearer bonds, coupons, share

certificates, stamps, money or other negotiable paper.

20. the loss or distortion of any data of yours held electronically.

21. any personal liability incurred by a director or officer of yours when acting in

that capacity or managing your business, or your breach of any fiduciary duty,

or any statement, representation or information concerning you or your

business contained in your accounts, reports or financial statements.

22. your supply, manufacture, sale, installation or maintenance of any product,

other than deliverables.

23. any statement you knew, or ought reasonably to have known, was defamatory

at the time of publication.

24. any act, breach, omission or infringement you deliberately, spitefully,

dishonestly or recklessly commit, condone or ignore. This does not apply to any

claim under the dishonesty cover in WHAT IS COVERED, but we will not in any

event provide cover to any party who actually commits, condones or ignores

any dishonesty.

HISCOX IT PI V1 04/05

25. any shortcoming, or alleged shortcoming, in your work which you knew about,

or ought reasonably to have known about, before we agreed to insure you.

26. date recognition.

27. war, terrorism or nuclear risks.

28. asbestos risks.

We will not make any payment for:

1.

any claim brought by an insured within the definition of you or any party with a

financial, executive or managerial interest in you, including any parent company

or any party in which you have a financial, executive or managerial interest,

including any subsidiary company. This does not apply to a claim based on a

liability to an independent third party directly arising out of the performance of

your business activity.

2.

that part of any claim where your right of recovery is restricted by any

contract.

3.

the costs and expenses involved in the refund, recall or replacement of any

service or deliverables.

4.

your lost profit, mark-up or liability for VAT or its equivalent.

5.

any trading loss or trading liability including those arising from the loss of any

client, account or business.

6.

fines and contractual penalties, aggravated, punitive or exemplary damages,

and additional damages under section 97(2) of the Copyright, Designs and

Patents Act 1988 or any statutory successor to that section.

7.

any claim, including arbitration, brought outside the countries set out in the

schedule under Applicable Courts.

This applies to proceedings in the applicable courts to enforce, or which are

based on, a judgment or award from outside the applicable courts.

The most we will pay for the total of all claims, losses and defence costs is the

single limit of indemnity shown in the schedule, irrespective of the number of claims.

You must pay the excess shown in the schedule for each claim, including defence

costs.

For lost, damaged or destroyed documents, information or data, we will pay the

reasonable expenses you incur with our prior written consent in restoring or

replacing them.

HISCOX IT PI V1 04/05

The most we will pay for the total of all claims and defence costs arising from

counterfeit goods including software is £25,000. You must pay the relevant excess

shown in the schedule.

At any stage of a claim we can pay you the applicable limit of indemnity or what

remains after any earlier payment from that limit. This includes defence costs

already incurred at the date of our payment. We will then have no further liability for

any claim, loss or costs.

We will not make any payment under this section:

1.

unless you notify us promptly of the following within the period of insurance

or at the latest within 14 days after it expires for any problem you first become

aware of in the seven days before expiry:

a.

your first awareness of a shortcoming in your work for a client which is

likely to lead to a claim against you. This includes:

i.

a shortcoming known to you, but not to your client, which you

cannot reasonably put right;

ii.

a complaint from your client about your work or anything you

have supplied which cannot be immediately resolved;

iii.

an escalating level of complaint from your client on a particular

project;

iv.

a client withholding payment due to you after any complaint.

If we accept your notification, this does not alter your obligation to take

reasonable steps to correct any problem as provided below but we will

regard any subsequent claim as notified to this insurance.

b.

any claim or threatened claim against you.

c.

your discovery, or the existence of reasonable grounds for your

suspicion, that any partner, director, employee or self-employed

freelancer has acted dishonestly.

d.

your discovery that any document, information or data of yours has

been lost, damaged or destroyed.

2.

if, when dealing with your client or a third party, you admit that you are liable

for what has happened or make any offer, deal or payment, unless you have

our prior written agreement. You must also not reveal the amount of cover

available under this insurance, unless you had to give these details in

negotiating a contract with your client or have our prior written agreement.

HISCOX IT PI V1 04/05

We will not make any payment under this section if:

1.

you failed to take reasonable steps before entering into a contract with a client,

or extending the scope of an existing contract, to ensure that either you could

provide the required level and quality of deliverables or services for the quoted

price using the resources available to you or the contract was capable of being

performed in accordance with all its terms and any representations made by

you or on your behalf; or

2.

you agreed in your contract with a client either to use more than reasonable

care and skill or to provide something more than reasonably fit for its intended

purpose or to have a greater financial responsibility for any claim covered by this

insurance than would otherwise be the case at law.

We will not make any payment under this section if you failed to take reasonable

steps to remedy or rectify, at your expense, any defect or failure in the deliverables

or services you have supplied to a client arising either prior to your client's

acceptance of the deliverables or within 180 days of acceptance or any longer

period specified in any contract with your client, including a maintenance contract.

This extends to your ensuring that you could correct any such defect by having the

relevant versions of the source code, if available to you, or by keeping back-up

copies of relevant software or data.

We will not make any payment under this section if you have failed to take

reasonable steps to make back-up copies of any data, file or program at

reasonably frequent intervals.

We will not make any payment under this section if you failed to limit in a contract

with your client any liability for loss of turnover, sales, revenue or profits, or for loss

of software or data, or for indirect, consequential or special loss, where it was

reasonable for you to have done so.

We have the right, but not the obligation, to take control of and conduct in your

name, the investigation, settlement or defence of any claim. If we think it necessary

we will appoint an adjuster, solicitor or any other appropriate person to deal with the

claim. We may appoint your own solicitor but on a similar fee basis as our solicitor

and only for work done with our prior written approval. Proceedings will only be

defended if there is a reasonable prospect of success and taking into account the

commercial considerations of the costs of defence.