Technology Errors & Omissions Insurance: What Does it Cover?
No tech professional wants to think they might be sued, but lawsuits are a reality of the business landscape. If a communication breakdown between you and your client turns ugly, you may find yourself in front of a judge. And once you’re there, it’s too late to think of ways to protect yourself.
If you are accused of negligence – even if you’ve done nothing wrong – you must respond to the suit unless you want to pay a default judgment. Usually that takes resources that are better spent on your growing business.
But if you invest in Errors and Omissions Insurance, your coverage can ease the financial burden of handling a negligence claim. Read on for details.
How Technology E&O Works
The simple fact that you have clients exposes you to risk. One of those risks is the possibility that they might sue you because they think you…
- Breached the contract.
- Made bad recommendations.
- Failed to provide the agreed-upon product.
- Were careless in your work.
- Made errors on the project.
- Omitted portions of the contracted work.
These are the kinds of claims that technology Errors and Omissions Insurance (i.e., E&O Insurance) typically covers. When a claim is made, your E&O may help pay for:
- Lawyer fees.
- Investigator bills.
- Court costs.
- Settlements or judgements.
You may wonder why anyone would accuse you of these things, but consider how IT projects typically go. For example, imagine what may happen if…
- Your client’s expectations are unrealistic. Many of your clients don’t understand the first thing about technology, and that may mean they don't really grasp the work you do. If they have unrealistic expectations for your work, they may be disappointed when it doesn’t meet their high hopes.
- The project takes longer than you expect. You know that fixing bugs is part of the process, but clients get frustrated when projects are behind schedule.
- The scope of the project changes. A client who changes their mind about what they want can create more work for you. However, if you only verbally amend the original written contract, you may be setting yourself up for contract disputes down the road.
- Your client has deep pockets. The larger the company is, the wider a net it is likely to cast in search of the contractor who caused it losses.
You can see why many technology professionals choose to protect their assets with Errors and Omissions Insurance, but there are steps you can take to minimize your risk, too. Learn more about risk management in “5 Ways Technology Consultants Can Manage their E&O Exposure.”
The Benefits of Carrying Technology Errors & Omissions Insurance
Errors and Omissions Insurance, sometimes called Professional Liability Insurance, can be a boon to your business as it grows. In addition to providing valuable protection, it also demonstrates your business's viability to prospective clients.
Clients often assume someone who carries insurance is financially stable. In fact, as your client list grows and you start contracting with bigger companies, don't be surprised if clients request to see your Certificate of Liability Insurance before they’ll enter a contract with you.
So get a head start on protecting your business and reaching more clients. Apply for technology E&O Insurance today.