Technology Errors and Omissions insurance for start ups
Technology Errors and Omissions insurance coverage is essential for startup businesses in the technology sector. Whether you’re a home-based startup, or an independent technology consultant, you should consider protecting yourself from the unique risks that affects technology products or services. Technology Errors and Omissions is part of a complete protection plan that should also include Cyber Insurance and Commercial General Liability Insurance.
What is Technology Errors and Omissions insurance?
Technology Errors and Omissions insurance is a type of professional liability coverage. it’s insurance that can defend you against claims alleging negligence, errors or omissions in your products or services.
Even the most detail-oriented professionals can make an honest mistake that has large consequences for their client. Tech errors and omissions insurance differs from standard errors and omissions insurance. While they both cover professionals from liability if they make a mistake that negatively impacts a client. Errors and omissions coverage may help you cover legal fees and pay damages to your client for their financial loss.
Tech errors and omissions extends coverage to include products that a technology professional creates. For example, if a software developer created a piece of software for a client that failed to work as advertised, or it negatively impacted the client, tech E&O would pay the damages on behalf of the insured in the event of a law suit.
Commercial General Liability coverage is also a necessary type of coverage that all business owners should consider. However, Commercial General Liability, often limits protection for professionals working in the technology sector. Before hiring a technology consultant, many large companies require proof that a professional like yourself has tech errors and omissions insurance.
Examples of Technology Errors and Omissions Claims
An omission by a website developer
A website developer is hired by a business to update an aging website. The client wants a new design and refreshed content. While developing the new website, the developer uploads photos, which get incorporated into the new website’s design. Months later, the developer finds out that the photographs are owned by a third party and that he doesn’t have the appropriate license to use the photograph. The developer, and the client, are sued for copyright infringement.
The damages and expenses, which totalled $35,000, were covered by tech errors and omissions coverage*.
A faulty product by a software development startup
A software company develops workforce management software that allows companies to track employee hours, overtime, and vacation time for payroll processing. The company sells the software to a client and agrees to provide implementation, installation, customization, training and support services. Six months after installation, the customer is dissatisfied, claims there are functionality problems with the software, and claims that the software doesn’t work as advertised. The customer terminates the contract due to negligence and failure of the product to work as intended.
The cost of damages, which exceeded $700,000, was covered by tech errors and omissions coverage*.
*Terms, conditions and exclusions apply, see policy for details.
This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information.