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How Errors and Omissions Coverage Can Protect IT Professionals in a Liability “Blame Game”

When you work as an IT subcontractor, perks include low overhead and more freedom to choose the projects that appeal to you. But that freedom comes with the possibility of serious financial repercussions if a job goes wrong.

When things go sour in the business world, it often becomes one giant blame game. As a subcontractor, if there’s an issue with a project you worked on, not only could the IT business that hired you file a lawsuit against you, but so could the company that hired them. The best way to protect yourself as an IT subcontractor is with technology Errors and Omissions Insurance coverage.

Why a Kitten Video Could Lead to a Technology E&O Insurance Claim

Say an IT business you frequently freelance for asks if you can install antivirus software at a doctor’s office. While configuring the office manager’s computer, a ransomware warning pops up. Turns out her addiction to kitten videos tricked her into opening a malicious email earlier that day. As a result…

  • Her files are encrypted.
  • The entire network is in danger of being hacked.
  • Patient records – including medical information and Social Security numbers – are potentially compromised.
  • The doctor’s office might face hefty penalties thanks to strict HIPAA regulations.

While you technically didn’t do anything wrong, you were at the scene of the crime when the attack happened. The doctor’s office sues you and the IT business that hired you to help recoup the cost of recovering from the breach. To add insult to injury, the IT business also sues you – all for something that wasn’t even your fault. It’s now a game of financial liability hot potato.

And you may not have realized that the nature of this particular job also elevated your risk. Healthcare is one of the industries most frequently targeted by cyber thieves, according to attorney Brian Dusek (@brianjdusek), partner at .

“Credit card numbers have a shelf life, which is why the healthcare industry is a more valuable target,” Dusek says. “You can’t cancel your Social Security number.”

Check out “Common Errors and Omissions Exposures for Technology Businesses” to learn what other common dangers you could face as an IT subcontractor. The good news: your technology E&O Insurance can help you navigate your legal bills.

E&O Insurance Coverage – The IT Subcontractor’s Best Ally

If you’re working as an IT subcontractor, you’re probably fairly independent. But Nina Kaufman (@NinaKaufman), business attorney and strategist at , cautions against being “the Lone Ranger” when it comes to protecting yourself against potential lawsuits.

In other words: make sure you protect yourself with the right insurance coverage, including technology Errors and Omissions Insurance. If your business faces a lawsuit, frivolous or not, your technology E&O coverage can help pay for expenses such as…

  • Attorney fees.
  • Expert witness testimony.
  • Court costs.
  • Damages if you’re found liable.

Additionally, you can minimize the chances of a lawsuit wiping you out financially by drawing up a contract in advance. It should clearly state who has liability for what. (Using contracts is the first tip in “5 Ways Technology Consultants Can Manage Their E&O Exposure.”)

“You can also push some or all of the risk onto your clients with contractual provisions, particularly indemnity clauses, where the client agrees to assume all of the responsibility in the event anything goes wrong,” says Adam Scavone (@adamscavone), attorney at the .

While assigning liability in a contract can offer an extra layer of protection, your secret weapon will still be your Errors & Omissions coverage if something goes wrong.