What does Tech E&O cover?
Technology professional liability (Tech E&O) insurance is intended to cover two types of risk:
(1) Financial loss of a third party arising from failure of the insured’s product to perform as intended or expected, and
(2) financial loss of a third party arising from an act, error, or omission committed in the course of the insured’s performance of services for another.
Who needs Tech E&O coverage?
|Common examples include information technology firms, programmers, software developers, data processors, web designers, computer consultants, and more. It is important to note, however, that Tech E&O is not limited to the technology industry. Most companies today utilize technology in some part of providing a service or product and need to take the necessary precautions. To ensure your company is covering all bases, a full risk management assessment is needed.
Here are some helpful examples where Tech E&O coverage would apply:
- Your company releases a software update, but fails to identify a programming error. A third party depends on this product to operate its business and its operations are stalled due to the error, causing them a financial loss.
- A part your company produces is installed in a piece of equipment. After a short amount of time, the component simply stops working, causing the equipment to fail to work, but otherwise not damaging anything or hurting anyone. The third party that relies on this equipment for its business has to stop operations and suffers a financial loss.
- An employee of your company recommends that a client make an adjustment to its network. The client follows the advice and its network crashes as a result, causing a time and financial loss for its operations.
Clarke & Sampson has been advising Alexandria businesses on technology E&O for over a decade. To learn more about professional liability insurance, you can reach us at 703-683-660 or follow the link below!