Technology errors and omissions - tech E&O insurance

Technology E&O is an insurance bundle designed specifically for IT and technology companies.

It includes errors and omissions insurance and cyber liability insurance policies, and costs tech companies an average of $67 per month.

Client contracts often require errors and omissions insurance, also known as professional liability insurance. This policy protects you when a client sues over professional negligence, such as an error or oversight.

For example, a project manager could have hired a key contractor who had to leave a project due to illness. When the project sails past its deadline, the client sues the project manager. The client lost profits when the work ran late, and they’re trying to get that money back.

Your E&O policy will pay for your legal defense and whatever it takes to resolve the case, be it a settlement, judgment, or fines.

E&O insurance protects your company when a client sues over:

• Errors or oversights
• Undelivered professional services
• Missed deadlines
• Budget overruns
• Incomplete work
• Breach of contract
• Poor advice

You don’t need to do anything wrong to face an E&O suit. A client might view it as a way to try and recover a financial loss. That’s why E&O coverage is so important for tech professionals, even those who think they don’t need insurance.

E&O insurance for tech companies can also cover lawsuits over copyrights and other intellectual property rights, but it usually must be added to your policy. You can also add media liability insurance, which covers lawsuits related to the content you create (ads, social media pages, websites, etc.).

An insurance agent can help you find an E&O policy with the coverage you need.

Cyber liability insurance protects your company against fallout from data breaches and cyberattacks. That includes claims that you failed to protect client data. There are two types of cyber risk insurance, first-party and third-party.

Technology companies that handle sensitive client or customer information should consider first-party cyber liability insurance, which covers data breaches on your own systems. Data breaches happen frequently and cost a lot of money to resolve.

Causes of data breaches include:

• Malware and viruses
• Phishing scams
• Application vulnerabilities
• Weak passwords and other employee errors
• Insider attacks

First-party cyber liability coverage helps pay for:

• Notifying affected customers
• Data recovery
• Damage control, like a PR campaign
• Credit and fraud monitoring services for affected customers
• Data breach source investigations
• Ransom demands from cyber extortion

Companies that only need first-party cyber coverage can often add it to their general liability insurance policy.

Third-party cyber liability insurance covers data breaches on clients’ systems that you worked on or for which you are responsible. IT consulting businesses, cybersecurity businesses, and other companies that recommend software or manage network security should buy this policy.

For example, say an IT consultant advises a client to move their customers' personal information to a new database. A hacker breaks into the database and exposes customer data, including credit card numbers. The client might sue the consultant to recover costs of dealing with the breach.

In a situation like this, a third-party cyber liability policy would cover your legal defense up to the policy limits. That includes:

• Attorney’s fees
• Court-ordered judgments
• Settlements

Third-party cyber coverage is also crucial for providers of technology services or software. For example, say a retailer depends on your software for customer transactions. If it goes offline, so does their business. The retailer might sue to try and recover from the business interruption.