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What does tech E&O insurance cover?

Technology errors and omissions insurance (tech E&O) protects your business against accusations of professional negligence, mistakes, and oversights. It also protects against data breaches that affect your business or a client.

What is technology errors and omissions insurance?

Tech E&O insurance is a bundle designed for tech professionals. It includes:

Errors and omissions insurance provides protection when a client accuses your business of professional negligence, such as an error or oversight. Cyber liability insurance protects your business against data breaches and cyberattacks – including claims that you failed to prevent a data breach or cyberattack that affected a client.

What is a data breach?

A data breach occurs when cybercriminals access a computer system or network without permission and steal confidential information.

The data thief might expose the information online or hold it hostage until the business owner pays a ransom. And there’s no guarantee the data will be returned if a ransom is paid.

Common causes of data breaches include:

  • Malware and viruses
  • Phishing scams
  • Application vulnerabilities
  • Employee errors, such as lost laptops or weak passwords
  • Insider attacks

Data breaches can be expensive and hurt a business’s reputation. Cyber liability insurance helps pay for the costs of a data breach.

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How does cyber liability insurance work?

Cyber liability insurance specifically helps businesses respond to and recover from data breaches. These policies come in two types:

  • First-party cyber liability insurance covers data breaches on your own systems
  • Third-party cyber liability insurance covers data breaches on clients’ systems that you worked on or for which you are responsible

Read our article "First-party vs. third-party cyber liability insurance" for details on how these types of insurance differ.

How does tech E&O insurance work?

Tech E&O insurance protects your business from accusations of professional negligence that caused your client financial loss.

Most insurance providers bundle both first-party and third-party cyber liability coverage with tech E&O policies. Talk to your insurer to verify that your E&O policy offers cyber liability protection. If not, you can usually add it for a higher premium.

A comprehensive tech E&O policy helps pay for:

  • Lawsuits over professional errors and omissions, including attorney's fees and court costs
  • Lawsuits over a data breach on a client's system, including attorney's fees and court costs
  • Customer notification that personal information was compromised
  • Credit and fraud monitoring services for affected customers
  • Data breach source investigations
  • Public relations and reputation management campaigns
  • Ransom demands from a cybercriminal who is holding data hostage

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