What is Tech E&O Insurance? A Comprehensive Guide
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Beth Keen
3 min
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August 1, 2024
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In today’s fast-paced digital economy, the same technology that drives innovation also introduces risk. For businesses providing tech products or services—whether software development, IT consulting, or data management—mistakes can lead to significant financial and reputational damage.
Technology Errors and Omissions (Tech E&O) insurance is a specialized form of professional liability coverage tailored for tech companies. It protects businesses against claims resulting from mistakes, oversights, or failures in their products or services. Without proper tech E&O coverage, companies may face costly lawsuits and settlements out of pocket.
At its core, tech E&O insurance covers financial losses caused by errors, omissions, or negligence in services provided. For instance, if a software flaw disrupts a client’s operations and results in lost revenue, tech E&O insurance helps cover legal defense costs and potential settlements.
With the rise in IP-related disputes, technology errors and omissions insurance often includes protection against alleged copyright, trademark, or patent infringement. It helps pay for legal fees and settlements, allowing businesses to navigate complex IP claims without major financial setbacks.
Though commonly associated with cyber insurance, many tech E&O policies include coverage for data breaches and cyber incidents. These costs may include:
This coverage is vital for businesses handling sensitive client data or offering cybersecurity services.
Even unfounded claims can be expensive. Tech E&O insurance typically covers attorney fees, court expenses, and other legal defense costs—providing critical financial protection when facing lawsuits.
Tech E&O insurance is essential for a wide range of technology-driven businesses, including:
Responsible for critical systems and infrastructure—mistakes can result in costly downtime.
Software bugs or compatibility issues can lead to major financial loss for clients.
Providing strategic guidance comes with risk—errors in advice or implementation can lead to claims.
Any company delivering digital solutions or technology services should seriously consider IT professional liability insurance like tech E&O.
A SaaS company delivers an application that, despite testing, crashes a client's system post-deployment. The client sues for lost revenue. The company’s tech E&O coverage helps with legal defense and settlement costs.
A cybersecurity firm is contracted to protect a client's data. After a breach exposes sensitive information, the client sues for damages. Technology errors and omissions insurance covers legal fees, breach response costs, and potential judgments.
When evaluating policies, consider the following:
Partner with a specialized insurance broker who understands the tech E&O insurance market. Tailored coverage ensures you’re protected against the risks most relevant to your business.
Tech E&O insurance cost depends on several factors:
As technology continues to evolve, so do the risks. From AI and automation to data privacy laws and cyber threats, tech E&O insurance will remain a crucial safeguard for tech companies aiming to innovate confidently.
At Flow Specialty, we help tech professionals stay protected in an increasingly volatile digital landscape. Our AI-powered tools and automation deliver fast, customized quoting, while our in-house team provides expert guidance and responsive support.
Let us help you secure a future built on innovation, resilience, and trust.
Q: What is Tech E&O insurance?
A: Tech E&O insurance is professional liability coverage that protects technology companies from financial losses due to errors, omissions, or negligence in the services or products they provide.
Q: Who needs tech E&O coverage?
A: Software developers, IT consultants, cybersecurity firms, and other tech service providers benefit from tech E&O insurance.
Q: What does Tech E&O typically cover?
A: Tech E&O typically covers claims related to errors, omissions, or negligent acts in delivering professional technology services. This includes software bugs, service outages, data mishandling, intellectual property disputes, and certain cyber-related incidents.
Q: How is Tech E&O different from general liability?
A: General liability insurance covers bodily injury, property damage, and advertising injury. In contrast, Tech E&O covers financial losses resulting from professional mistakes, faulty software, or service failures—risks specific to tech companies.
Q: How is Tech E&O different from cyber liability?
A: Cyber liability insurance focuses specifically on data breaches, hacking, and digital security incidents. Tech E&O may include limited cyber coverage, but it primarily addresses errors in service delivery or product performance. For full protection, many businesses carry both policies.
Q: How much does tech E&O insurance cost?
A: Costs vary depending on your business size, services, and claims history.
Q: Does tech E&O cover cyberattacks?
A: Many tech E&O policies include some coverage for cyberattacks and data breaches, but for broader protection, a standalone cyber liability policy is often recommended.
Q: How do I choose the right policy?
A: Work with a broker who specializes in professional liability for tech companies. They’ll help you assess your risks and tailor a tech E&O policy that fits your business needs.
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