Nearly every small business these days, but especially an IT business, has some degree of risk related to technology. It could be a programming error, security breach of confidential customer information, or client data loss. Just operating in today’s modern tech environment lends itself to increased risk for the small business owner. Small tech businesses that have websites, blogs, and that 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.
Consider the situation where your server crashes, and one of your clients is unable to conduct their business while the server is down. Perhaps you may lose this key client due to this, but the client may also come to you looking for reimbursement for his financial losses resulting from the crash. Mistakes do happen in every business and even the most cautious of small business owners may be subject to an error or omission.
Technology E&O professional liability insurance protects your information technology small business if any of your clients hold you responsible for technological errors and therefore files a claim against you, or sues you 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. However, most general commercial policies don’t provide coverage for technological errors or contract disputes.
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.
