Technology Insurance FAQs

Q: What is Technology Errors and Omissions Insurance?

Technology Errors and Omissions Liability protects your company from claims if your client holds you responsible for programming errors, software performance, or the failure of your work to perform as promised in your contract.

Coverage includes legal defense costs - no matter how baseless the allegations. Errors and Omissions insurance will pay for any resulting judgments against you, including court costs, up to the coverage limits on your policy.

Coverage extends to both W2 employees and 1099 subcontractors, and can be worldwide in scope.

Q: When do I need Technology Errors and Omissions Insurance?

We generally recommend this coverage be at the foundation of every technology company’s insurance portfolio. Usually it is wise to purchase the coverage prior to product or site launch, or when you have customers.

It can be required by web hosting companies like EarthLink or Globix, as well as by investors, particularly VC’s.

Q: Why do I need Technology Errors and Omissions Insurance?

Don’t Be Fooled. Technology Errors and Omissions insurance coverage is not provided by a Commercial General Liability policy. Commercial General Liability does NOT provide coverage for programming errors, contract performance disputes or any other Professional Liability issues. IT consultants and companies who have General Liability without Professional Liability (Errors or Omissions) coverage are taking a serious risk. It’s like a doctor practicing medicine without Malpractice insurance.

Mistakes Happen. Every company makes a mistake at some point. For example, you recommend to a client that they run a certain test of their system, after you did some extensive work on it. The client takes your advice, the system crashes, and they are unable to conduct business for a whole week. The client becomes enraged, calls his attorney, and looks to you for reimbursement.

You Can’t Be Everywhere. Sometimes you can’t personally handle every job. Errors and Omissions coverage insures not only your mistakes, but also the mistakes of the employees and Independent Contractors you hire.

IT and technology professional service providers operate in a perilous business climate - professional liability insurance will help protect your business.

Most Importantly: Errors and Omissions insurance might save you from extreme embarrassment, a lost client, or worst of all, a bad reputation.

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