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Abstrakt Marketing Administrator2023-10-31 09:00:002024-11-21 14:30:37The Role of E&O Insurance in Managing Supply Chain RisksWho Needs Tech E&O Insurance?
As a responsible business owner, you likely already have business insurance to cover your property, liability, and auto risks. But do you know if you need technology errors and omissions insurance?
Technology E&O protects your company from intangible technology-related risks that negatively impact your clients. The errors and omissions policy covers negligence in the development and deployment of software or hardware that causes downtime or data loss, as well as third-party claims of breach of privacy or unauthorized access to data.
Keep reading to learn who needs technology errors and omissions insurance and how it works.
What Is Technology Errors and Omissions Insurance?
Technology errors and omissions coverage is insurance for IT services. Many businesses’ products are tangible items or professional services like food products or floor installation that can be covered through general liability insurance. But how do you protect something that doesn’t fit well into either category?
As a tech company, you may sell software or write code for a client’s website. A software product can’t give a client food poisoning, and writing code for a website can’t cause property damage in a client’s office. So, what does technology errors and omissions insurance cover?
In short, this coverage protects you from lawsuits filed by clients negatively impacted by your services or software.
Maybe you failed to have a website live by the agreed upon deadline and they lost business because of this. Or, perhaps the software you sold to a client was faulty and erased important, irreplaceable data. Both events could result in lawsuit expenses and settlement costs that technology errors and omissions insurance would cover. For companies providing technology services, a technology E&O policy could save them from financial repercussions.
What Does Tech E&O Coverage Cover?
Traditional E&O policies cover allegations of negligence, errors, and omissions in providing technology-related services or advice. They can also protect against breach of contract claims as long as they arise from the performance of your IT-related services.
However, it’s important to note that tech E&O policies don’t cover willful misconduct, fraud, alleged copyright infringement, or intentionally improperly performed services. The policy also excludes claims arising from: pornography, obscene materials, tobacco products and services, illegal activities, and claims made by employees or business partners.
What Is the Difference Between Tech E&O and Cyber Liability Insurance?
Cyber liability insurance and technology errors and omissions might sound like the same thing, but they cover separate risks. In some instances, a technology business might need technology E&O and cyber insurance to cover its risks adequately. Any company that conducts business over the internet can benefit from cyber insurance, which covers your business in the event of a data breach or cyberattack. Cyber insurance policies can also help recover data, repair damaged systems, and reduce financial losses from a cyberattack.
If an IT business sells faulty software to a company that loses money from lost business, technology errors and omissions insurance pays for lawsuit costs and damages. But if an IT company is affected internally by a ransomware attack, its cyber insurance policy would pay for the ransom costs and lost profits.
Learn More About Technology E&O Insurance
IT professionals should connect with Southpoint Insurance agents to get the support and coverage they need to protect against future negligence, errors, omissions, and breach of contract claims.
Deciding on the Right Errors and Omissions Insurance for IT Consulting Firms
Information technology companies provide a vital service in our increasingly virtual world. Having a technology error & omissions policy in place now can help protect your IT business from costly lawsuits down the road. You never know when a mistake may be made that could lead to litigation from a dissatisfied customer or client. Without the proper coverage in place, you may be forced to pay for all damages out of pocket, which could quickly run into the thousands or even millions of dollars depending on the severity of the issue.
Tech E&O policies are specifically tailored to IT professionals. They provide coverage for errors in software, hardware, and IT consulting services that could not be anticipated or prevented by a reasonable standard of care. This includes the cost of defending allegations and damages resulting from those allegations. A tech E&O policy also covers errors due to changes in technology over time, such as when customers experience problems after upgrading their systems.
If you run an IT company and are concerned about the risks that face your industry, insurance experts can help identify your coverage needs and find the best policy for you. Because technology errors and omissions coverage is a niche product, finding coverage can pose a challenge. Seasoned insurance agents have long-lasting relationships with various carrier partners and can shop your coverage to uncover the best carrier for you.
Southpoint Insurance Can Help Protect Your IT Business
The insurance landscape is vast and has a multitude of coverage options, but the proper guidance can save you from feeling lost and overwhelmed. Southpoint agents can provide you with technology errors and omissions quotes from multiple carriers, many of which will have an A+ rating with the Better Business Bureau. We can help you select the coverage that best suits your IT business needs.
Your business has specific risks that could leave you vulnerable to an expensive lawsuit. Don’t wait until you’ve already suffered a client suit to cover your IT business—Southpoint has a vast network of carriers, providing you with more choices for your business. Let us help you explore your best options now.
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