Technology Errors & Omissions Insurance

What is Technology E&O?

Why do you need it?

• Protection Against Claims of Negligence
  In the tech world, where outcomes are highly dependent on the performance of products and services, any misstep can lead to accusations of negligence. E&O insurance covers legal fees, settlements, and judgments, ensuring such claims do not endanger your financial stability.
• Contractual Requirements
  Many clients, especially in high-stakes industries, require their tech providers to carry E&O insurance as a prerequisite for engagement. This requirement underlines the provider’s credibility and reliability.
• Client Trust and Reputation
  Carrying E&O insurance demonstrates a commitment to professionalism and builds trust with clients. It shows that you are prepared to stand behind your work and address any issues responsibly.
• Risk Management
  Technology projects often involve complex processes and deliverables. E&O insurance serves as a safety net for risks that are not covered by General Liability insurance, such as financial losses from software failure.

Common coverage parts

• Negligence
  Covers legal defense and damages for claims alleging negligence in the services or products provided by the tech company.
• Defense Costs
  Covers legal expenses related to defending against claims, regardless of the lawsuit's outcome.
• Errors and Omissions
  Protects against financial losses resulting from errors, omissions, or failures in delivering technology services or products.
• Breach of Warranty
  Covers claims arising from a failure to meet a project's contractual obligations or warranties.

Common exclusions

• Intentional Wrongdoing
  Acts of fraud or intentional misconduct are not covered.
• Prior Known Claims
  Claims or circumstances known before the policy inception date are excluded.
• Bodily Injury and Property Damage
  Typically covered under General Liability, not E&O.

Limits and deductibles

• Per-Claim vs. Aggregate Limits
  Technology E&O policies often specify both per-claim limits, which cap the amount payable for any single claim, and aggregate limits, which set the total payable for all claims within the policy period. Understanding the distinction is essential for assessing whether the coverage adequately meets your risk exposure. Usually, per-claim and aggregate limits are set at the same level for Technology E&O insurance policies.
• Policy Limits
  Policy Limits for Technology E&O insurance usually start at around $1 million per occurrence/claim, with an aggregate limit (the total coverage limit for all claims within the policy period) that might match or exceed the per-occurrence limit. For smaller tech firms or startups, limits might range from $1 million to $5 million. Mid-sized to larger companies, or those dealing with high-value contracts and services prone to significant risks, might opt for higher limits, ranging anywhere from $5 million to $20 million or more.

• Lower Premiums vs. Out-of-Pocket Costs
  Higher deductibles generally result in lower premium payments, as they reduce the insurer's risk. However, companies must weigh the potential savings against their ability to absorb higher out-of-pocket costs in the event of a claim.
• Smaller tech firms might see deductibles starting as low as $1,000 to $5,000 for each claim. However, it's more common for deductibles to range from $10,000 to $25,000, especially for companies with a solid financial footing and those looking to reduce their premium costs. For larger tech companies or those with a higher risk exposure, deductibles can be much higher, potentially reaching $100,000 or more, depending on the insurer’s assessment of risk and the company’s ability to absorb loss.

Typical cost

• Business Size and Revenue
  Generally, the larger the tech company and the higher its revenue, the more expensive the E&O insurance premium will be. This is because larger businesses typically have more at stake in each project or service provided, increasing the potential liability.
• Scope of Services
  The specific type of technology services or products offered significantly impacts the cost. Businesses that provide high-risk services, such as those related to financial transactions, personal data, or critical infrastructure, may face higher premiums due to the increased risk of significant financial loss from errors or omissions.
• Claims History
  Companies with a history of frequent claims may be viewed as higher risk by insurers, leading to higher premiums. Conversely, a clean claims record can help negotiate lower costs.
• Policy Limits and Deductibles
  Higher policy limits and lower deductibles increase the insurer's risk, thereby increasing the premium. Opting for a higher deductible can reduce the cost of the policy, but it also means the company must cover a larger portion of any claim out-of-pocket.
• Geographical Location
  Operating in multiple countries or in jurisdictions with a history of high litigation costs can also drive up the cost of E&O insurance.

• For small to mid-sized tech companies, annual premiums can start from as low as $1,000 to $3,000 for modest coverage limits with higher deductibles. This range is generally suitable for businesses with lower revenue and less exposure to high-risk services.
• Mid-sized to larger firms, or those offering higher-risk services, might expect annual premiums to range between $5,000 to $25,000 or more, depending on their specific risk profile, chosen limits, and deductibles.
• At the higher end, large tech enterprises or those with significant exposure to high-risk sectors could see annual premiums exceeding $25,000, especially if they opt for high coverage limits with low deductibles.

Useful statistics

• According to a study by a major insurer, technology and telecommunication companies accounted for about 12% of all professional liability claims, underscoring the sector's exposure to risks that can lead to E&O claims.

Why have it with Koop?

• Industry Expertise
  Koop understands the unique risks and challenges faced by technology companies. This specialized focus means they can offer policies tailored to the specific needs of tech businesses, such as coverage for software development risks, data breaches, and intellectual property issues.
• Risk Management Automation
  Koop offers an advanced Enterprise Risk Management (ERM) automation tool that allows companies to effectively manage contractual requirements, reduce risk through risk controls, and unlock insurance benefits such as insurance discounts and simple renewals. Additionally, the tool saves a lot of time on insurance and compliance tasks.
• Customized Solutions
  Unlike one-size-fits-all policies, Koop provides customizable insurance solutions that can be adapted to fit the unique operational needs of your tech company. Whether you're a startup or an established enterprise, Koop can tailor a policy to match your specific risk profile and business model.

How to get started?

1. Click "Sign Up" to instantly create an account on our platform
2. Go in, select Technology E&O, and fill out an application
3. Get a quote, carefully review it, and hit "Accept"