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Why Do IT Professionals Need E and O Insurance?

Let's get one thing straight off the bat: not every small business needs Errors and Omissions Insurance. In some industries, there's just not a great enough risk of lawsuits to justify the cost of an E & O policy.

But if you own a technology company, you should be aware that your risk of an E&O lawsuit could well be higher than that of business owners in other industries. Here's why.

  1. Many of your clients don't fully understand what you do. Because of this, your expectations for a project and theirs may not line up. When you deliver work that you think is perfect, they might be disappointed – and decide to sue. If and when such a lawsuit arises, your Errors and Omissions coverage takes effect.
  2. The laws haven't caught up with your work. It's no secret that technology evolves faster than the courts can keep up. This means that, if you're challenged on your work, there might be no precedent for how the courts should rule. In such a situation, your E&O policy would cover the cost of legal representation so you could defend yourself in court.

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70% of businesses raise prices or cut hiring when sued