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Ask Us about Tech Insurance!

You've got questions - we've got answers!

Since launching TechInsurance in 1997, we've received thousands of questions about insurance from the owners of technology startups and small tech businesses. As technology our customers use has evolved over the years, so have their questions, but many of the issues are just as relevant today as they were way back then.

Why Do I Need Professional Liability Insurance?

Professional Liability Insurance is the policy tech business owners typically purchase after General Liability Insurance. The reason? Professional Liability Insurance, also known as Errors & Omissions (E&O) Insurance, can protect you financially if your business is sued over work mistakes.

For example, a tech business might get slapped with an E&O lawsuit for:

  • Delivering a project late or incomplete.
  • Creating a buggy app for a client.
  • Failing to secure a client’s network, which allows for a data breach.

A disgruntled client who isn't happy with how a project turned out can sue, too. A client might even try to sue just to weasel out of paying the bill. (The nerve!) For more on your potential liability, read “5 Professional Liability Exposures Every Tech Business Has.”

What Is the Cost of a Professional Liability Lawsuit?

The answer is different for everyone, but the costs to defend your business in a professional negligence lawsuit can add up before you step foot in a courtroom.

According to Braden Perry (@bradenmperry), a regulatory and government investigations attorney with the law firm , even cases that get tossed out without going to trial can still cost a small-business owner roughly $10,000 to $15,000 in legal fees.

“For a case to go through the answer stage, discovery, and a ruling on a motion for summary judgment, it can cost a company roughly $50,000,” says Perry.

He adds that if a case survives a summary judgment, it could cost a small-business owner approximately $100,000 to take the case all the way to a jury verdict.

At that rate, it’s easy to see just how costly a Professional Liability lawsuit can be.

The Bottom Line

Obviously, it's up to you whether or not to purchase Professional Liability Insurance. However, many consider it a solid investment, especially considering how pricey lawsuits can be. Most business owners would rather have the policy to help pay for:

  • Attorney fees.
  • Court costs.
  • Expert witness fees.
  • Settlements, fines, and judgments.

“Sometimes people balk at buying Professional Liability Insurance and say, ‘Oh, what do I need it for?’ and I say, ‘Well, if you are going to take the business seriously, you really should have it,’” says Adam Kaufman (@ABKattorneys), attorney, founder, and owner of .

To get a Professional Liability Insurance quote for your tech business, apply online today.

70% of businesses raise prices or cut hiring when sued