April 19, 2023
Technology Professional Indemnity (E&O) is an insurance policy that safeguards professionals and companies within the technology industry against claims of errors, omissions, or negligence concerning the products or services they provide.
The coverage of this insurance policy includes legal defence costs and settlements or judgments in the event a client asserts that a technology service or product underperformed, damaged their property or business, or led to financial losses. The policy also covers various technology-related risks like software and hardware defects, network outages, data breaches, and intellectual property infringement.
What types of business need Technology PI insurance ?
Technology PI insurance is a necessity for any business offering technology-related products or services, including but not limited to software development, IT consulting, web hosting, cloud computing, data processing, and telecommunications.
There are several specific types of companies that should consider obtaining Technology PI insurance, including:
- Software developers and publishers
- IT consultants and service providers
- Website designers and developers
- Cloud computing and hosting providers
- Data processing and storage companies
- Telecommunications and Internet service providers
- E-commerce and online marketplace platforms
- Social media companies
- Artificial intelligence and machine learning developers
- Cybersecurity and data protection companies
In general, any company that provides technology services or products that could potentially result in financial loss or harm to their clients or customers should consider purchasing Technology PI insurance.
Example of claims
Below I have put together a few claims examples that will help illustrate how a Technology policy can be vital to your risk management strategy.
Breach of Contract / Failure to Deliver:
A client hires a technology implementation consultant to install a new system that is expected to enhance their business's efficiency and productivity. However, the system fails to meet the promised outcomes, and the client may sue the consultant for the expenses incurred by the failed project.
A cloud service provider experiences a network outage that leads to significant downtime for their clients. The clients may seek compensation for the loss of revenue and productivity due to the outage.
Software Bugs & Errors:
A software company develops and sells a new product that has a critical bug resulting in data loss or system crashes for its customers. The affected customers may file a claim against the software company for the loss of data, productivity, or other damages.
Intellectual Property Infringement:
A gaming developer accidentally uses code from a third party without permission, leading to a lawsuit for copyright infringement. The developer's Technology policy may cover the legal defence expenses and any resulting settlements or judgments.
A legal firm experiences a data breach that exposes sensitive customer data. The affected customers may sue the company for damages, such as identity theft or financial losses.
Should you or your client need a consultation on your Technology insurance needs or a bespoke policy suited to your business get in touch today?
Written by George Grimshaw
Cyber Insurance Specialist - UK & International