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Errors & Omissions Professional Liability

Professionals have a greater duty of care than general contractors, so there is an increase in risk for the advice or data information you give that may cause physical, emotional or financial harm.

What is E&O - Professional Liability Insurance good for?

E&O insurance is a form of business liability insurance coverage for those who are providing professional services or advice to a customer. If an error or omission causes the customer financial harm, the business is can be protected if it carries an E&O policy.

Professional liability will help cover the legal costs that can accumulate if clients decide that they want to sue you because they believe that an error or miscalculation you made while performing your services has caused them to suffer a loss of some kind, usually financial.

Many industries with particular risks have insurance products tailored to a specific profession; legal professional liability insurance and medical malpractice insurance.

The same goes for the technology industry. Technology errors & omissions policies are designed to protect from risks commonly associated with tech companies, which is currently one of the fastest-growing industries in the world economy.

Who is E&O - Professional Liability Insurance for?

E&O insurance is vital for those in any industry where the public perceives the professional as having a greater duty of care to provide sound advice or services. For those who regularly put their business interests at risk while providing these services, should consider E&O coverage.

Many commercial general liability insurance policies, according to Hortica.com, don’t include E&O coverage; if they do, the amount is not very large. The risk is significant for those who do not have E&O insurance, and it is not something new to the market either.

Risk management experts who specialize in providing the right coverage for technology companies commonly cite Tech Errors & Omissions as one of the most important policies and an essential piece of the puzzle when putting together a good tech insurance package.

Technology E&O insurance was created to provide coverage for companies working in cutting-edge fields and offering services and products that can impact third parties in a way that requires a new, modern approach to assessing liability and providing coverage for less risky risks tangible and traditional.

Why would I need E&O - Professional Liability Insurance?

Having this form of insurance helps protect individuals, companies, and other professionals from taking on the total cost of defense for lawsuits related to errors or omissions when providing professional services. E&O comes into play if a client holds the company/individual/professional responsible for errors or fails to complete the work as promised in a contract.

Suppose you run a tech company, especially a new company that might be looking to attract investors. E&O should be one of your primary concerns when it comes to putting together the right insurance package.

Along with cyber liability insurance, professional liability is a must for tech companies.

Any company that is working in a cutting-edge industry and offers services and products that are pushing the envelope and exploring new territory need to purchase this coverage because it was created to cover these less tangible and untraditional risks that modern tech companies often face

What does E&O - Professional Liability Insurance cover?

E&O insurance coverage policies are designed to cover the legal defense costs incurred trying to prove liability or innocence. E&O insurance coverage policies also cover the final judgment or settlement if the business is deemed at fault.

Early-stage and other young tech companies who don’t have a lot of revenue coming in just yet might not be able to survive any costly claim or court case.  

That’s why having insurance to protect your company from such possible financial losses is imperative. Tech companies that are just getting started need to properly invest and use every penny they have and be conservative with their spending. In such a situation, it’s easy to understand how devastating a liability claim can be if the company does not have insurance.

The company doesn’t even have to lose the case to lose a lot of money. Court proceedings and trials related to tech companies are often very complex and can take a long time to resolve, during which legal fees and defense costs can pile up.

Tech Errors & Omissions insurance will cover risks related to the financial loss of a third party arising from your company’s product or service’s failure to perform as expected or meant to perform.

What does E&O - Professional Liability Insurance not cover?

As is the case with most types of insurance, there are specific exclusions that a tech E&O policy usually will not cover. Most notably, professional liability will not cover claims that are the direct result of you or your employees engaging in criminal activity or illegal acts.


Financial insolvency is also not covered by a tech E&O policy.

Also, most professional liability policies will not cover copyright infringement or libel claims either. If you need this coverage, you should add intellectual property insurance to your company’s tech E&O coverage.


Errors and omissions insurance doesn’t help cover claims from events that happened before your policy’s retroactive date. It also doesn’t help your business with lawsuits filed after your policy’s extended reporting period.

 

  • Illegal acts and purposeful wrongdoing, such as intentionally breaking the law or deceiving your customers or clients.
  • Bodily injury or property damage that your business causes. For these kinds of claims, you’ll need a general liability insurance policy.
  • Employee injuries or illnesses caused by their work. A workers’ compensation insurance policy can give your employees benefits to help them recover from a work-related injury or illness. Be aware that many states require this coverage if you have employees.
  • Discrimination or harassment in the workplace that your employees file. Getting employment practices liability insurance can help cover these types of claims.

What does E&O - Professional Liability cost?

The cost of purchasing E&O Coverage depends on the amount of coverage, the number of employees, and total revenue. However, with our research, we have found the average cost for a company with under $1mm in revenue, a $1mm limit of E&O, and under ten employees will be approx $1125 / year.

Why buy your E&O - Professional Liability insurance from InsureCert?

Easy

We’ve made it easier than ever before to complete the purchase and get coverage. How easy? We don’t even need to see equity ownership or financial statements from you.

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Affordable

As a digital company, InsureCert passes the savings for unnecessary administration on to you—for the most competitive price you’ll find anywhere.

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Complete

Protect your startup with the broadest coverage in the industry. You can tailor policies to your needs by choosing your own limit and deductible.

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Human

We provide you with expert answers no matter your question: Reach us 24/7 via phone, email or live chat. You even get a personal account manager to look after you and your insurance needs.

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Still wondering about E&O - Professional Liability Insurance?

Here are some real world examples of claims:
  • A multinational corporation sold technology products and related services to a corporate customer. Approximately 500,000 of these units had a design defect causing interference with another company’s technology products. The corporation faced costs associated with repaying their customer for resulting damages.  Claim:  Failure to Build to Specifications  
  • The insured was hired to develop an enterprise management platform for their customer, a public utility. The customer alleged problems with the roll-out of the platform and its functionality. The insured was ultimately unable to cure the problems with the software’s functionality. The claimant terminated the agreement and commenced a lawsuit alleging damages over $5 million associated with the costs of having to switch IT providers. Claim: Failure to Deliver
  • The insured was accused of errors in the manufacturing and assembling of approximately 40,000 defective technology units. The insured’s customer sought damages over $10 million. Claim: Errors in Manufacturing
  • A provider of enterprise resource planning software was accused of misrepresenting its ability to, and ultimately failing to, deliver a functional, fully integrated system, which the customer claimed affected its ability to manage nearly all aspects of its business. The customer sought damages over $3.5 million to replace the deficient software and for expenses for customization, employee training, and employee time. Claim: Failure to Deliver Software Platform

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