Technology Insurance: Why You Need Tech E&O Coverage

Technology Insurance: Why You Need Tech E&O Coverage

If you own a business, you likely understand the need for errors & omissions coverage to protect against tangible damages. For architects, contractors, and engineers, damages are usually serious: either loss of life, or substantial damage to property. It is harder for a technology professional to see the need for errors & omissions, because when a claim arises the damages are typically intangible.

Technology insurance may be a relatively new and emerging insurance product, but it is a necessity for anyone providing technological services.


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Technology Insurance: What Is It?

Errors & omissions coverage is a product that covers professionals against possible claims that may arise from a failure to perform, or inability to execute, their professional services.

This coverage is essential to keeping many professionals in business for the long haul. Lawyers, accountants, architects, engineers, consultants, and even insurance agents need errors & omissions to protect them against lawsuits that may arise out of the services they provide throughout the course of their work. This is no different than a technology professional who is working on systems, software, and hardware that affect the day-to-day operations of their clients’ businesses.

A technology professional’s errors & omissions claim is likely to include damages for stolen client information, notification/credit monitoring costs, lost income due to failure to meet a deadline, or perhaps a violation of intellectual property. These types of claims are more difficult to foresee, but can be of similar detriment to a small business. Remember, the insurance policy pays to defend your claims, regardless of the validity of the claim.


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Technology E&O: A Safety Net

Imagine that a local accounting firm were to have their systems attacked by malware or hackers. They are now required to notify all 1,400 of their clients of the breach. They are also required to pay 1 years’ worth of credit monitoring for each of the affected individuals. They are also going to be unable to work for a month while they get everything back up and running correctly. The total of this claim could easily surpass $150,000.

Now imagine that this accounting firm has an annual contract with ABC IT Provider to keep their firewalls up-to-date and all of their systems safe. Do you think that they will just pay the $150,000 claim out themselves or seek to recover some damages from ABC IT Provider? My money is on them seeking to recover damages in any way possible.

It does not matter if the systems were updated properly by ABC IT Provider. They can still be dragged in to the claim and forced to defend themselves. A good technology errors & omissions policy would pay the cost to defend ABC IT Company as well as any damages, if they are found responsible within the policy terms of course.



A good technology insurance policy should cover you for errors & omissions, personal injury, bodily injury, failure to prevent unauthorized access, and unintentional introduction of malicious code. Most of them also have options to buy limits for first-party cyber, regulatory defense, and intellectual property.

We recommend talking to a local, independent agent to find out what product/optional coverage are right for you!  

About the Author

Jason received a Masters of Science & Management in Risk Management & Insurance from Florida State University. He has been with Harry Levine Insurance for 9 years and handles the leadership of daily operations. He was the 2013-2014 Florida Association of Insurance Agents Young Agent Council's Agent of the Year. Currently serves on FAIA Board of Directors.

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