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Tech E&O: Errors and omissions insurance for technology companies

Technology errors and omissions insurance, also called tech E&O, bundles errors and omissions insurance with cyber insurance to protect against common risks faced by tech companies.

What is tech E&O insurance?

When a client accuses your tech company of an error or oversight, your business needs to be prepared for the consequences. Lawsuits can be devastating to both your daily operations and bottom line, especially for small tech companies with limited resources.

When an errors and omissions insurance policy includes third-party cyber liability coverage, this combined policy is called technology errors and omissions insurance, or tech E&O. While E&O helps cover legal fees related to lawsuits from a client's dissatisfaction with your professional services, third-party cyber coverage can pay for your business's legal expenses if a client files a lawsuit after experiencing a data breach.

Most tech companies purchase tech E&O policies for maximum protection. You might also see this coverage called tech professional liability insurance.

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What does tech E&O insurance cover?

A tech E&O policy provides liability coverage related to:

  • Oversights and mistakes
  • Failure to deliver promised IT services
  • Breach of contract
  • Third-party cyber liability (data breach lawsuits)
  • Intellectual property and media liability (for certain professions)

Oversights and mistakes

In the IT industry, a mistake can have serious consequences. For example, a DNS error at a web hosting company or other service provider could lead to website downtime and potential lost customers for a client.

If a client sues over professional negligence, it can be costly for your tech company - whether or not you’re in the wrong. Technology errors and omissions coverage can safeguard your business from the resulting legal costs.

Failure to deliver promised IT services

Your clients may depend on your technology products and services to run their businesses. If an SaaS company has an outage, or an SEO consultant misses a critical deadline, the client could sue to recoup financial losses.

Your tech E&O policy would help pay the costs of a lawsuit claiming you failed to provide a certain technology service, or install promised equipment due to a supply chain issue.

Breach of contract

No one ever wants to break a contract, but sometimes factors outside of your control can delay a project. For example, a mobile app developer or data analyst might leave a company mid-project, leaving the business unable to meet its deadline. Technology E&O insurance would help pay for an attorney, a court-ordered judgment, or a settlement.

Third-party cyber liability

Third-party cyber liability insurance provides financial protection if a client sues your business for failing to prevent a data breach.

For example, a client could sue an IT consultant who recommended insecure software for their computer systems that were affected by a cyberattack. This policy would help pay for legal fees, in addition to PR costs to fix the company’s reputational damage.

Cybersecurity insurance covers many different cyber risks, from accidental exposure of client data to phishing and denial-of-service (DoS) attacks. Cyber extortion is typically covered, but check with an agent when you buy a cyber policy so you know what's included.

Intellectual property and media liability

Web developers, app developers, and tech companies that build websites, apps, and other content should make sure their tech E&O policy includes coverage for intellectual property (IP) and media liability claims.

IP claims include lawsuits related to trademarks and software copyright infringement. Media liability insurance covers lawsuits related to content built, designed, or published by your business.

E&O coverage protects your tech business from oversights and mistakes

View video transcript.

No, no, no! My client's network was working just fine last week!

You made a mistake, yeah, you made a mistake. You made a mistake, and it doesn't matter what you say. You missed the boat, now you will have to pay!

Actually, you have errors and omissions insurance. It covers legal costs if you make a mistake and your client sues you.

Mistake! Mistake! Ohhh, this was a mistake! Mistake! Mistake! Ohhh, this was a mistake!

You can get all the coverage your business needs by following this link. Protection is peace of mind!

How much does technology errors and omissions insurance cost?

IT business owner makes calculations on a tablet.

IT businesses pay an average of $67 per month for tech E&O 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:

  • IT 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

Other types of business insurance for IT professionals to consider

While tech E&O insurance covers numerous risks faced by technology experts, it does not provide complete protection. Exclusions vary depending on your insurance company and specific policy, so you may want to chat with an insurance agent to make sure your policy provides sufficient coverage.

Other policies may be better suited to cover other types of risks. Information technology companies should also consider the following types of insurance:

General liability insurance: This liability policy covers expenses related to client bodily injuries and property damage, along with advertising injuries like slander. Technology businesses can bundle it with commercial property insurance for savings in a business owner’s policy (BOP), or add electronic data liability coverage to protect against lost data.

Cyber insurance: You may want to invest in standalone cybersecurity insurance to protect your own company’s data, such as clients’ credit card numbers. This policy can include business interruption insurance to cover business income loss related to a cyberattack or data breach.

Fidelity bonds: Because IT companies are often privy to sensitive data, an employee could jeopardize your business by engaging in unlawful access of client data, theft, or fraud. Fidelity bonds safeguard your business when an employee engages in these criminal acts.

Workers’ compensation insurance: This policy covers medical bills and partial lost wages from work-related injuries and illnesses. Most states require technology businesses with employees to purchase workers’ compensation.

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

Get free tech E&O quotes and buy online with Insureon

Are you ready to protect your IT business with technology errors and omissions insurance? Complete Insureon’s easy online application to get quotes from top U.S. insurance providers. Once you find a policy that fits your needs, you can begin coverage in less than 24 hours.

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Updated: January 22, 2024
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