Nearly every small business, but especially an IT business, has some degree of risk related to technology. Whether it is programming errors, security breach of confidential customer information, or client data loss, operating in today’s modern tech environment lends itself to increased risk. Small tech businesses that have websites, blogs, and participate in social networking may have an added risk for copyright and libel claims. Purchasing Technology E&O insurance offers protection against these risks and more.
Technology E&O professional liability insurance protects your information technology small business from claims if any of your clients hold you responsible for technological errors, or for failure to perform as stated in your contract. Professional liability insurance may also protect your IT company against charges that may not have been your businesses’ fault, like hardware or software malfunctions. Some investors demand, and some web hosting companies require technology E&O insurance.
What’s Covered? Technology professional liability insurance includes coverage for legal defense. Professional E&O insurance will pay for court costs and any judgments made against you, up to your policy coverage limit. Keep in mind, most general commercial policies don’t provide coverage for technological errors or contract disputes.
Consider the situation where your server crashes, and a key client is unable to conduct business while the server is down. Not only may this cause you to lose this instrumental client, but the client may be looking to you for reimbursement for his financial losses. Not only that, but mistakes happen in every business. Even the most cautious of small business owners may be subject to an error or omission.
For these reasons, a small business owner should not go without professional liability insurance if he operates a technology business. A doctor wouldn’t practice without malpractice insurance, and an IT firm should operate without technology E&O insurance. These days, legal costs are hefty, and if your IT firm is slapped with a claim or lawsuit involving litigation, it could be more than your small business could financially handle. But perhaps even more important, technology E&O insurance can help protect your firm’s reputation.