Liability Insurance ... Embedded Software

From: Mike V. (valemike_at_yahoo.com)
Date: 07/13/04 

Date: 13 Jul 2004 01:00:41 -0700

I currently am a partner in new company where we repair and return
electronic controls for customers whose warranty with the OEM has
expired. It can be as easy as diagnosing a failed relay or IC, and
replacing it.

Okay, so the insurance is straightforward, and probably cheap. A non
electrical/software engineer partner of the company got the minimal
coverage necessary to allow us to operate.

Lately, we are finding that a significant number of customers are now
asking for special customized firmware. This is where my confusion
starts.

The types of electronic embedded controls that we service have motor
controls,specifically motors that can cause INJURY.
 
1. If I want to rewrite the embedded software (firmware), what kind of
insurance do I need to get?
(It is desirable to rewrite the firmware because we know of defects in
it that cause the parts to fail faster. It is also desirable to
rewrite the firmware because some customers who seek our services want
customized operation with their controller).

2. Do I pay significantly more for insurance now that we want to go in
and change the firmware with our own? On a technical standpoint, it
seems that there is more risk in changing the OEM's firmware out of
their micros than simply troubleshooting the electronics and replacing
a part.

3. I don't know if such a business now requires E&O insurance (errors
and ommisions?) or product liability insurance.

4. If I simply replace a failed component, is the OEM still
responsible for the product that is repaired by my company?

I really don't know the terminology of the different kinds of
insurance. I'm sure many of you in comp.arch.embedded are also small
business owners (or now, medium sized businesses).

Thanks,
Mike

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