Technology is an essential factor for most businesses, but it can be a source of major problems. With 68% of business leaders feeling like their cybersecurity risks are increasing, tech companies must ensure that their products will not be the source of problems. After all, when your technology fails, your customers can come after you for the losses they suffered due to that failure.
Fortunately, technology errors and omissions liability insurance can act as protection for you. It is a type of professional liability insurance that can defend you and your technology services against claims filed by clients due to mistakes, omissions, or negligence. It also covers data and network security breaches in cybersecurity.
As a tech company, you need this technology errors and omissions liability insurance cyber security since traditional policies don't cover these types of financial losses.
The cost of claims can severely damage the finances of tech companies, especially startups that do not have a lot of revenue yet. Even established technology companies need a business insurance policy to protect their financial health. Tech E&O insurance is meant to cover providers of services or products such as computer manufacturers and data storage companies.
A Tech E&O policy insurance coverage includes those risks that are related to your client's financial losses when your products and services fail to perform accordingly. Specifically, the insurance can help cover the legal fees and other costs for:
When the products that you provided have caused problems to customers, you can be accused of professional negligence. As an example, you may have installed software applications that affected the client's computers. Therefore, your client can file a claim against your technology company and create property loss exposures for your business. Errors omissions insurance waives you of such liability should these tech errors occur.
If a company has relied on your services but you failed to perform or deliver on time, it can cost them a lot. In such a case, they can file a lawsuit and claim that you failed to complete your tasks on time. For example, you promise to complete a mobile phone app but you were not able to make it on the promised date. Because of that, the client has to face financial losses.
As a consequence, the client may file a case against you since you were not able to perform the task according to what was expected.
Information technology errors or mistakes can have several repercussions. For instance, let's say an error in the app that you developed has caused some issues when customers access it. As a result, the client company ended up losing clients.
On a completely different note, some clients may accuse your company of committing tech mistakes even though it isn't the case. If that happens, you still need to face the lawsuit and pay legal costs.
A comprehensive Technology Errors and Omissions insurance policy should include third-party cyber liability coverage. This type of insurance serves as protection when a client sues your company for providing products that fail to prevent a data breach. Protection from errors and omissions insurance can help save you from financial distress by covering the costs of legal proceedings.
Even in IT industries, human mistakes are also inevitable. Errors and omissions refer to negligence or failure to meet standards which unfortunately caused damage to a client. In particular, these errors and omissions include clerical mistakes, carelessness, failure to disclose adequate instructions to a client, and breach of contract. An errors omissions insurance policy aims to address these needs.
While both types of insurance policies shield a company from common liabilities, they mainly differ in the type of lawsuits covered. The lawsuits involve in general liability include concerns in an accident at your office, copyright infringement, and a client's stolen property while at your business location.
On the other hand, errors and omissions insurance only protects your company from court cases based on professional mistakes. The coverage is much narrower than general liability since they focus only on certain lawsuits concerning breach of contract, oversights, undelivered services, and failure to uphold a standard of care.
Cyber liability insurance covers financial losses from data breaches and other data privacy issues. The cyber liability insurance coverage allows your business to reimburse costs incurred in data restoration, cyber extortion threats, business interruption caused by a virus or hacker attack, notification costs, and crisis management expenses.
To ensure that your business stays financially stable, you need a Tech E&O policy and insurance to help pay legal fees. If you are a company that provides technology services and products, a client can file a lawsuit at any time. This is when they believe that you are responsible for the financial losses they experience due to tech faults.
Errors and omissions insurance allows your business to continuously innovate and invest in technology products while minimizing potential risks. For more information about the types of insurance policies you need for your business, contact Assured Standard today!