Technology E&O
Professional liability coverage tailored for technology companies covering errors in software, IT services, data processing, and tech consulting.
What It Is
Technology E&O is a specialized form of professional liability insurance designed for technology companies, covering claims arising from errors, omissions, or failures in technology products and services. It addresses exposures unique to the technology sector that standard professional liability policies may not adequately cover.
Technology E&O typically covers: failure of software or technology products to perform as intended, errors in IT consulting advice, system implementation failures, data processing errors, failure to meet service level agreements (SLAs), intellectual property infringement in technology deliverables, and unintentional introduction of malicious code. Some Technology E&O policies bundle cyber liability coverage, creating a combined Tech E&O/Cyber policy.
The coverage is written on a claims-made basis and typically provides defense inside the limit. Limits range from $1M to $25M or more depending on the company's revenue, client base, and contractual requirements. Technology E&O is distinct from general E&O because it addresses the unique failure modes of technology—software bugs, system downtime, data corruption—that general E&O policies may exclude.
Why It Matters for Brokers
Technology companies face unique professional liability exposures that standard E&O policies often exclude or inadequately cover. A software bug that crashes a client's system, a failed ERP implementation, or a cloud service outage can cause millions in client losses. Brokers serving technology accounts must place Technology E&O rather than generic professional liability to ensure proper coverage for tech-specific exposures.
Real-World Example
A SaaS company's platform experiences a 72-hour outage due to a code deployment error, affecting 340 clients. Three enterprise clients with SLA guarantees sue for $1.8M in combined business interruption losses and SLA penalties. A generic E&O policy might exclude technology product failures or SLA breach. The company's $3M Technology E&O policy covers the full $1.8M in damages plus $290,000 in defense costs. Without Technology E&O, the SaaS company—with $8M in annual revenue—faces a potentially existential $2.1M uninsured loss.
Common Mistakes
- 1Placing generic professional liability instead of Technology E&O for IT companies, missing coverage for software failures, SLA breaches, and technology-specific exposures.
- 2Not verifying whether the Technology E&O policy includes or excludes cyber liability—some are bundled, others are not, creating potential gaps.
- 3Setting Technology E&O limits based on company revenue rather than client contract values and maximum possible loss from a technology failure.
How brokerageaudit.com Handles This
brokerageaudit.com's Submission Intake identifies technology companies by SIC/NAICS code and service descriptions, automatically recommending Technology E&O over generic professional liability. The Policy Checker verifies that the Technology E&O covers the specific services the company provides and checks whether cyber liability is bundled or requires a separate policy. The system cross-references client contracts for Technology E&O limit requirements.