Imagine a client claims your software had a bug that caused their website to crash. Without the right insurance, your tech business would have to handle the legal fees and any damages on its own. This is where Technology Errors & Omissions (E&O) Insurance comes in. It’s a special policy that protects technology businesses when a customer blames them for a mistake or oversight in their product or service. If your app, software, or tech service doesn’t perform as promised and the client loses money, tech E&O coverage helps pay for your legal defense and any settlement costs.
Technology E&O insurance matters because even your best client could sue if something goes wrong. These professional liability claims aren’t covered by a standard general liability policy. In fact, clients might take legal action even if you did nothing wrong. They could simply be unhappy with the result. One lawsuit like that can be financially devastating. It could disrupt your business or even force a small company to close its doors without the right coverage.
This insurance gives business owners peace of mind. Most tech companies get E&O coverage to safeguard their livelihood. Tech E&O often comes bundled with cyber liability insurance for more complete protection against data breach lawsuits and other digital risks. Having this coverage also shows that you take responsibility for your work. In fact, many clients require tech E&O insurance before signing a contract with a tech vendor.
Who Needs This Coverage
Any company that provides technology services or products to customers should consider tech E&O coverage. This policy is especially useful for:
- Software and App Developers: If your software or mobile app fails to work as promised and causes a client to lose money, they could blame your company and even sue for the loss.
- IT Consultants and Systems Integrators: If you advise on or set up technology for clients, you could be sued if a project goes wrong or a system you recommended fails.
- Web Designers and Digital Agencies: Mistakes on a website or in an online marketing campaign could hurt a client’s business, leading them to file a claim against you.
- Hardware and Electronics Manufacturers: If your tech device or component malfunctions and causes downtime or other problems for a customer, they might seek compensation from your business.
- Telecom and Internet Service Providers: If your company provides communications, cloud, or hosting services, an outage or error could lead a client to claim that your business caused their financial loss.
What This Coverage Protects Against
Tech E&O insurance helps protect your company from several kinds of expensive lawsuits, such as:
- Mistakes or Oversights: If you make an error or forget something important in your professional services that causes a client financial harm, this policy can cover the resulting legal costs and damages.
- Missed Deadlines or Undelivered Work: When projects run late or a promised service isn’t delivered, a client might lose money and hold you accountable. Tech E&O can step in to cover those claims.
- Breach of Contract: If a client claims you didn’t meet your contract terms (for example, a project wasn’t completed as agreed), your E&O insurance helps pay for your legal defense and any settlement.
- Data Breaches and Cyber Incidents: If a hacker attack or data breach happens on a system you built or maintain, a client could blame your business. Tech E&O can cover lawsuits related to security failures like these.
- Intellectual Property Issues: If someone accuses you of copying or infringing on their software or content, this coverage helps with legal costs and damages.
Next Steps
Now that you understand technology E&O insurance, you may want to take action to protect your business. Consider reaching out to schedule a call with our team to discuss your company’s unique needs. We can help you find the right coverage so you can operate with confidence. You can also explore more of our resources to keep learning about managing your risks.