Do any of your clients sell software, design websites, provide data storage, host an online marketplace, or offer other technology products and services?
What would happen if one of those tech companies fell behind on an e-commerce site launch deadline? Or crashed a client’s existing website? Or inadvertently caused a data breach?
In such cases, their affected clients would be looking to your clients to right the wrong—and your clients would be glad they carried Technology Errors and Omissions Insurance.
Every business runs the risk of making errors and omissions. Yet tech providers must take the risk especially seriously, because complex and rapidly changing technology figures more and more prominently in industries of every kind.
Tech E&O Insurance policies are simply more important than ever.
What Is Technology Errors and Omissions Insurance?
What is Tech E&O coverage? It applies to claims brought forth by clients when a business makes a mistake, by error or omission, in providing professional services.
For technology providers, these are often claims of negligence or breach of contact. Their clients may be financially harmed by the mistake and seek damages.
This third-party coverage protects businesses from the inevitable because, ultimately, mistakes can, do, and will happen. That fact, however, is no excuse for failing to prepare for them.
What Does Tech E&O Insurance Cover?
As technology grows and changes at a rapid pace, the margin for error in the tech space is large. Because of this fact, technology companies frequently face E&O claims. Your clients carry a significant risk if they’re uninsured or inadequately insured.
Tech clients need broad coverage as they’ll have to respond to a wide range of claims that can be made against them.
Some business owners may believe Tech E&O Insurance costs are too high, and they don’t feel that they have room in their budget for this coverage. In reality, 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.
How does Tech E&O coverage work? Some businesses that 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 Insurance claims include:
- A project running behind on a client’s deadline or over on the price
- An error causing a client’s website to crash
- A software update causing damage to the client’s computers
Your clients could cause significant digital asset damage, business interruption costs, and a blow to other companies’ reputations. In that event, they must be prepared for the consequences.
Since the passage in 2018 of the California Consumer Privacy Act (CCPA)—which entitles any California consumer to see what information about them a company has saved, including information shared with third parties—tech companies have become even more vulnerable to third-party claims. A company doesn’t even have to be physically located in California or the U.S. to fall under this law’s provisions.
A data breach need not 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 misleading or unknown to the customer may be found liable for a privacy violation.
Tech E&O vs. Cyber Insurance
Many business owners mistakenly believe they don’t need Tech E&O Insurance if they already have a Cyber Insurance policy, or vice versa. However, the two policies provide different coverages altogether.
While Tech E&O covers mistakes on the company’s part as they provide professional technology services to clients, Cyber Insurance protects the insured against cyber attacks.
As cyber threats grow in complexity, severity, and frequency, Cyber coverage and E&O Insurance for tech companies are imperative investments. Any technology company should be buying a combined policy, with Tech E&O and Cyber all provided on the same policy form.
Indeed, cyber risks and E&O risks are often so intertwined, separating them can be difficult.
Protect Your Clients & Build a Partnership With ProWriters
ProWriters is an industry leader that offers underwriting authority for several leading insurance companies. Because 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 only your clients running the risk. As brokers, you must make sure you’re covered. Laws and coverage requirements change rapidly. Make sure you’re taking your own E&O needs as seriously as your clients’ needs.
To get started, contact a ProWriters expert online today, or call us at (484) 321-2335.
