Technology E&O Policy
A professional liability policy designed for technology companies covering errors in software, IT services, cloud computing, and tech consulting.
What It Is
A Technology E&O Policy is a specialized professional liability product designed for technology companies and IT service providers. It covers claims alleging that the insured's technology products or services caused financial harm to a client or third party due to errors, omissions, or failures in performance.
The coverage typically addresses claims from software defects, system implementation failures, data loss, failure to meet service level agreements (SLAs), IT consulting negligence, and technology product failures. Most Tech E&O policies also include network security and privacy liability coverage, effectively combining professional liability with cyber liability in a single policy.
Tech E&O policies are written on a claims-made basis and are specifically tailored to the unique risks of technology businesses, unlike generic professional liability forms that may not adequately address technology-specific exposures.
Why It Matters for Brokers
Technology companies face professional liability exposures that standard E&O forms are not designed to cover. Software failures, SLA breaches, and data loss events require policy language that specifically addresses technology services and products. Brokers serving technology clients must understand the distinction between general professional liability and Technology E&O, and ensure the policy form is appropriate for the specific technology services the client provides.
Real-World Example
A cloud-based HR software company experiences a system outage that lasts 72 hours, affecting 200 employer clients during their bi-weekly payroll processing cycle. Several clients are unable to process payroll on time and face employee complaints and regulatory inquiries. The Tech E&O policy covers the defense costs and settlements from claims by affected clients for the financial harm caused by the outage, totaling $340,000.
Common Mistakes
- 1Placing technology companies on standard professional liability forms that exclude or limit coverage for technology product failures.
- 2Not verifying whether the Tech E&O policy includes cyber/network security liability or if a separate cyber policy is needed.
- 3Failing to disclose all technology services and products on the application, leaving some service lines uncovered.
How brokerageaudit.com Handles This
Policy Checker validates that technology company professional liability policies include tech-specific coverage grants and cyber liability components appropriate for the insured's service offerings.