Technology E&O – Professional Liability: What’s Covered, What’s Not

Mar 8, 2023

While technology can improve efficiency and convenience, it’s not without risk. Technology E&O insurance protects businesses and their staff from negligence, mistakes, and cyber threats. Learning what E&O insurance is and is not will help you better meet your clients’ needs and make sure you don’t leave them with any gaps. 

What Is Technology Errors and Omissions Insurance?

Technology errors and omissions (E&O) insurance is a type of professional liability insurance that specifically covers tech businesses against risks resulting from mistakes, exclusions, negligence, or other failures associated with their products or services. Should a client or customer claim product or service failure, the insurance covers legal fees, damages, and other related costs on the business’s behalf. Examples of cases in which technology E&O insurance may apply include but aren’t limited to:

  • Accidental copyright infringement
  • Breaches of contract
  • Breaches of warranty
  • Data breaches
  • Employee fault
  • Misrepresentation

Who Needs Technology E&O Insurance?

Businesses that engage in consultation or advice services in the technology sphere may want to consider technology E&O liability insurance. That includes entities engaged in:

  • Consumer electronics design
  • E-commerce
  • Electronics manufacturing
  • IT consultation
  • Software as a service
  • Software development
  • Website design

Knowledge of E&O insurance also protects agents from technical errors. This puts you in a unique position to educate customers on the uses of E&O insurance since it’s a policy that’s also beneficial within your own industry. 

Reasons To Consider Technology E&O Professional Liability Insurance

Many businesses can benefit from technology E&O professional liability insurance. Here are a few of the top reasons:

Cybersecurity Risks

Cybersecurity risks are steadily increasing, making tech E&O insurance a useful policy to consider. In fact, the threat of cyber liability is one of the most common reasons for purchasing professional liability insurance today. Technology E&O insurance covers financial losses that may arise from network security breaches or corrupted technology. Cyber liability insurance, when combined with tech E&O, adds a layer of protection against data breaches involving customers’ personal data.

Legislative Changes

Continuous legislation changes are another good reason to consider E&O professional liability insurance. Recent laws, for example, may combine the liabilities of all franchisees under the main franchisor. Franchisees can also sue franchisors under the Little FTC Act for unfair trade practices, putting larger businesses at risk of a lawsuit.

Remote Workers

Remote working environments can also benefit from a tech E&O professional insurance policy. More employers than ever are allowing their employees to work from home. It may be more difficult for these employers to ensure that all team members are up to date on the latest safety and legal protocols, which may increase their liability risk. 

It can also be harder for agencies to monitor independent employees or contractors, like insurance agents. Newer insurance agents may be more prone to making mistakes in the first few years of their careers. A professional liability policy covers the business entity in case one of these independent agents makes an error.

Defective Technology

Finally, tech E&O insurance can protect businesses from technology failures outside their control. Defective computer programs or outdated security measures can threaten a business. Customers may sue the company after their information is stolen or they incur costs from crashed systems.

Technology E&O – Professional Liability: What’s Covered, What’s Not

Technology E&O insurance is a business liability coverage that pays the cost for damages from technical issues. Typically, tech E&O insurance covers the following:

  • Mistakes or errors that cause clients’ expenses
  • Omissions or negligence
  • Inability to meet a due date or timeline that leads to a financial loss
  • Breach of contract
  • Legal fees and court costs
  • Settlements or judgments

It’s also important to know what technology E&O insurance doesn’t cover. Generally, technology E&O insurance doesn’t cover:

  • Legal fees related to criminal charges
  • Intentional wrongdoing or negligence
  • Personal injuries
  • Temporary employees

Some of the exclusions may be a part of general liability insurance, including personal injuries. Technology E&O professional liability coverage is meant to make up for situations in which a generalized insurance policy won’t cover the damages. Professional liability also excludes any illegal activities, including discrimination or intentional cyber crimes.

A comprehensive insurance policy should include both generalized and professional liability coverage. This ensures that you have the maximum protection against liability and negligence. Do you want to find out more about technology E&O? Contact one of our highly-trained brokers to create a policy that works for you or your client’s unique situation.

The Jencap Professional Lines Insurance Team

The Jencap Professional Lines Insurance Team

Whether it’s professional, management, or cyber liability, Jencap’s experienced brokers stay on top of industry trends and one step ahead of the competition, so they can offer the best guidance to you and your clients. Armed with decades of experience, Jencap’s dedicated professional lines team works tirelessly to navigate difficult risk placements, strict security control requirements, ever-changing market capacity, and unpredictable rate fluctuations.
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Over the past few years, companies have faced a myriad of business risks — cost-cutting layoffs, supply-chain disruptions, sexual misconduct allegations, social inflation, cyber threats, and more. In our increasingly litigious society, it’s never been more important for businesses to ensure they’re protected. It’s also never been more challenging to secure reasonably-priced, comprehensive professional liability coverage. By partnering with a strong wholesale broker who focuses exclusively on professional lines, you and your clients will have the advantage, even in a hard mark.

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