Professional Liability Insurance
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Technology professional liability insurance

Technology professional liability insurance covers legal costs related to mistakes, oversights, and other accusations of negligence, including when they lead to a data breach or cyberattack at a client's business.

Who needs tech professional liability insurance?

Any business that provides professional services can benefit from professional liability insurance. However, technology professional liability insurance is designed for the unique risks of tech companies and contractors. That's because these two policies are a little different:

  • Professional liability insurance protects against legal costs when a client accuses your business of professional negligence.
  • Tech professional liability insurance includes both professional liability insurance and cyber insurance, extending this protection to negligence that leads to a data breach at a client's business.

For example, an IT consultant might recommend insecure software to a client. If the client suffers a security breach, they might blame the IT consultant and sue to recoup their financial losses. Tech professional liability insurance would cover the consultant's legal defense costs, including a settlement or judgment.

Professional liability insurance is also referred to as errors and omissions insurance or E&O insurance, so you might see this policy called technology errors and omissions insurance or tech E&O.

Professional liability vs. errors and omissions: A side-by-side comparison

View video transcript.

Insurance jargon can be difficult to follow when a policy is called by multiple names.

One example is professional liability, also known as errors and omissions, or malpractice insurance. The coverage is the same, but the name may depend on the type of business that the coverage is for.

For architects and consultants, this policy is called professional liability. In the real estate and IT sectors, it’s errors and omissions. And, for medical and legal professions, it’s known as malpractice insurance.

Like most insurance policies, the cost may vary depending on several factors, such as location and industry.

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What does technology professional liability insurance cover?

A tech professional liability policy provides liability coverage related to:

Errors and oversights

Technology companies are often in a position where a simple mistake can have a tremendous financial impact on their clients. For example, a web developer's coding error could cause a client's website to crash on a product launch day, causing the loss of thousands of dollars in revenue.

Delayed or undelivered IT services

Forces outside of your control could lead to a missed deadline or unanticipated project delays. For example, the loss of a key employee at your computer repair shop could result in several laptops not being returned to customers by a promised time, and a potential lawsuit.

Breach of contract

You sign contracts with clients in good faith, but an unexpected disaster could lead to a broken contract. For example, if a managed service provider (MSP) suffers a DDoS attack, their clients could be forced to deal with hours or even days of downtime. If that downtime costs them money, the result could be a lawsuit.

Data breaches and cyberattacks

Third-party cyber liability insurance protects you when a client holds your business responsible for a data breach or cyberattack, and it's included in tech professional liability.

For example, a cybersecurity company might fail to patch a known vulnerability in a client's computer system, which leads to a data breach. The client could sue the cybersecurity business to recoup customer notification costs and other losses.

Intellectual property and media liability

Tech companies that publish online content, such as web designers and app developers, should make sure their professional liability policy includes coverage for intellectual property (IP) and media liability claims.

IP claims involve trademarks and copyrights, such as a competitor who claims you stole or copied their software. Media liability insurance covers lawsuits related to published content, such as an image of a person shared on social media or a website that results in a privacy violation claim.

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What is the difference between professional liability and general liability insurance?

Professional liability insurance covers costs related to the quality of your work, such as a lawsuit over a missed deadline. On the other hand, general liability insurance pays costs resulting from common third-party (non-employee) accidents.

For example, a general liability policy can help pay for legal fees from:

  • Bodily injuries
  • Property damage
  • Defamation, such as libel or slander
  • Advertising injuries, such as copyright infringement

Small businesses often need the protection offered by both insurance policies to cover the range of lawsuits they might encounter.

How much does technology professional liability insurance cost?

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Tech companies pay an average of $67 per month for tech professional liability coverage, but you could pay more or less depending on your level of risk and exposure.

Insurance costs for technology professionals are based on a few factors, including:

  • Technology services offered, such as IT training, cloud computing, and PC building
  • Business equipment and property
  • Tech company size
  • Annual business revenue
  • Insurance products purchased
  • Coverage needs, such as certain policy limits
  • Number of employees
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What other types of business insurance should IT professionals consider?

Technology professional liability insurance covers a broad range of risks for tech companies and contractors, but it doesn't provide all the protection you need. You may want to contact an insurance agent to make sure your coverage matches your risks.

Other policies commonly purchased by technology experts include:

General liability insurance: This policy covers costs from everyday accidents, such as a client who trips and suffers an injury at your office. You can often bundle it with commercial property insurance for savings in a business owner’s policy (BOP), or add electronic data liability coverage to protect against loss of data.

Cyber insurance: Standalone cybersecurity insurance protects your own company’s data, such as clients’ credit card numbers and email addresses. This policy can include business interruption insurance to cover business income loss related to data breaches and other cyber risks.

Workers’ compensation insurance: This policy covers medical treatment and disability benefits in the event of an employee injury. Most states require technology businesses with employees to purchase workers’ compensation.

Commercial auto insurance: This insurance coverage is required in most states for vehicles owned by a tech company. It can cover property damage and medical bills in an accident involving your company vehicle, along with vehicle theft and vandalism.

Fidelity bonds: A fidelity bond compensates affected clients when an employee at your business engages in fraud, theft, or other dishonest acts. You may need a bond to sign a contract with a client.

Find the right professional liability policy with Insureon

Are you ready to protect your information technology business with professional liability insurance? Complete Insureon's easy online application to get quotes from top-rated U.S. insurance companies. A licensed agent can help make sure your coverage fulfills requirements and matches your business needs. Once you find the right policy, you can begin coverage and get a certificate of insurance in less than 24 hours.

Updated: March 18, 2024
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