Technology-based businesses are exposed to several risks that can lead to overwhelming financial challenges that might be difficult to overcome without the right insurance coverage. Finding adequate protection is essential to maintaining a healthy business, whether you offer a tech product or service.
Technology Errors & Omissions (Tech E&O) is the most common type of tech insurance. It’s a form of professional liability coverage that protects when a business’ product or service fails to meet a customer’s expectations. For example, a software developer might be sued for professional negligence if their product fails to perform as promised and results in their client losing money.
It’s important to understand that tech E&O is different from cyber insurance. Tech E&O protects against the financial losses from a failed product or service, whereas cyber insurance protects against data loss and attacks. Both types of insurance are beneficial to tech-based businesses.
Who needs it?
Any business that provides a technology product or service needs technology insurance, which includes:
- IT consultants
- Software developers
- Web designers
- Computer manufacturers
- Data storage companies
- Web developers
- IT staffing companies
- Social media consultants
Other coverages tech businesses might need:
- Cyber Insurance: Covers liability and recovery costs in the event of a breach or an electronic threat to your computer systems or data.
- Workers’ Compensation: Covers for medical costs and a portion of lost wages for employees who become injured or ill at work.
- Commercial Auto: Needed if you use a vehicle for work. This can include picking up supplies or driving to off-site appointments.
What does it cost?
The cost of your technology E&O coverage will depend on your area of expertise because each tech specialty faces their own unique risks. Several other factors including coverage needs, contractual requirements and claims history, can also factor into your cost.
For example, an IT consultant with several large clients will likely have a higher cost than a software developer with only a few clients. The IT consultant also has a higher exposure with the types of recommendations they offer their clients.
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