Every type of business runs the risk of making possible errors and omissions. As technology takes part in more and more industries and changes every day, tech providers should be taking errors and omissions (also known as E&O) risks even more seriously. Do you have clients who sell software,provide data storage, design websites, or provide an online marketplace?
What would happen if these tech clients fell behind on an e-commerce site launch deadline, lost a client’s data, or crashed a client’s website? Their affected clients will be looking to your clients to right this wrong. The claims that can be brought forth are broad and these are only a few of the many Tech E&O claims examples that your clients may face. E&O Insurance for tech companies is now more important than ever as so many industries rely on technology to conduct business.
What is Technology Errors and Omissions Insurance?
Technology Errors and Omissions insurance provides coverage for potential claims brought forth by clients when a business makes a mistake (by error or omission) in their professional services. For Technology providers these are often claims of negligence or breach of contact in providing their services. Their clients may be financially harmed by this mistake and seek damages. This third-party coverage protects businesses from the inevitable because ultimately, mistakes can and will happen.
Tech E&O vs. Cyber Insurance
Many business owners may mistakenly believe that they don’t need Tech E&O insurance if they already have a cyber insurance policy (or vise versa). However, the two policies provide very different coverages. While Tech E&O provides coverage for mistakes on the company’s part as they provide professional technical services to clients, cyber insurance coverages provide protection to their insured against cyber attacks. As cyber threats grow more and more serious, cyber coverage and E&O insurance for tech companies have become an imperative investment. Any technology company should be buying a combined policy that has Tech E&O and Cyber all provided on the same policy form, as the risks are often so intertwined they would be hard to separate.
What Does Tech E&O Insurance Cover?
As technology seems to outgrow even itself, changing at a rapid pace, the margin for error within the tech space is large. Because of this, technology companies are frequently faced with these claims and your clients carry a significant risk if they’re uninsured or inadequately insured.
Tech clients will need broad coverage as they’ll have to respond to a wide range of claims that can be made against them. While some business owners may believe that technology errors and omissions insurance costs are too high, and they don’t feel that they have room in their budget for this coverage, the reality is: The cost of this insurance premium is a small investment to make in comparison with the costs and damages associated with possible E&O exposure.
So how does Tech E&O insurance work? Some businesses who may be at risk include:
- Contract software developers
- Software licensing
- IT consulting
- Website developers
- Hosting companies
- Managed Service Providers (MSPs)
Some examples of technology errors and omissions claims may include:
- A project that runs behind on a client’s deadline or over on the price
- An error that causes a client’s website to crash
- A software update that causes damage to the client’s computers
Your clients could cause significant digital asset damage, business interruption costs, and a blow to the reputation of other companies. When this happens, they have to be prepared for the consequences.
With the passing of the California Consumer Privacy Act (CCPA), which entitles any California consumer to see what information a company has saved on them (including information shared with third-parties), tech companies have become even more vulnerable to third-party claims.
Now, a data breach doesn’t have to have occurred in order for a company to be held liable for a consumer’s information. Any business or organization that (knowingly or by error or omission) utilizes a consumer’s information in a manner that is misleading or unknown to the customer may be found liable for a privacy violation.
Protect Your Clients & Build a Partnership with ProWriters
ProWriters is an industry leader that offers underwriting authority for several leading insurance companies. Since your E&O insurance for tech companies will need broad coverage, ProWriters can help them find the right protection, without paying for policy stipulations they don’t need.
In addition, it’s not just your clients who are at risk. As brokers, you’ll need to make sure you’re covered as the laws and coverage requirements change rapidly. Make sure you’re taking your own E&O needs as seriously as your clients!
To get started, contact a ProWriters expert today or call us at (484) 321-2335.