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3 Most Common Errors & Omissions Claims for Technology Firms

These three incidents are among those that most commonly cause IT freelancers, contractors, and small-business owners to file claims on their E and O policies.

  1. Client data breach: As an IT professional, you likely provide your clients with products and services that involve the handling, storing, or processing of digital data. If one of your clients experiences a data breach, they may be able to sue your business to recover some of the expenses of responding to the breach. Luckily, most Errors and Omissions policies sold to IT firms include protection for data breach lawsuits (called third-party Cyber Liability Insurance).
  2. Breach of contract: You fail to live up to the terms of a project laid out in a contract, and your client suffers a loss, which prompts them to sue to recover damages. Be aware that a breach of contract suit can be over something as small as missing a deadline.
  3. Negligence: You, an employee, or a contractor fails to use "reasonable care" (or your client believes you did). Either way, the work you did causes losses for your client. To recover those losses, your client sues.

Any of these incidents can trigger an E&O claim that leads to an expensive and time-consuming lawsuit. E and O policies for IT professionals cover the legal expenses associated with defending your business in such a lawsuit.

Next: 3 Tips for Receiving E & O Insurance Payouts Every Time

70% of businesses raise prices or cut hiring when sued