Technology Errors & Omissions Insurance

What this coverage is — and what it is not

Technology errors and omissions (tech E&O) insurance covers a technology company's liability for failing to deliver its product or service as promised. The typical claim scenario involves a software vendor whose implementation missed deadlines and cost the client downstream revenue, a managed services provider that failed to meet a contracted service-level agreement, an IT consultancy whose configuration error took a client's system offline, or a software product with a defect that caused a client's business process to fail or produce incorrect results. The loss at the center of a tech E&O claim is a client's financial harm from the technology not working — not the exposure of their data.

This is the critical distinction from cyber liability insurance: cyber liability responds when the insured's or a client's data is breached, stolen, or exposed, and pays for costs like breach notification, credit monitoring, ransomware response, and regulatory defense. Tech E&O responds when the technology itself underperforms, malfunctions, or is implemented incorrectly, causing a client's business loss unrelated to a security incident. A software company can face a tech E&O claim with no breach at all — for example, a defect that silently corrupts data or a project that is delivered months late — and it can face a cyber claim with no performance failure at all, such as a credential-stuffing attack against a product that otherwise worked exactly as designed. Many technology companies carry both policies because the two exposures are genuinely separate risks, not overlapping coverage for the same event.

Who needs it

Software developers and SaaS companies, IT consultancies and managed service providers, systems integrators, hardware and embedded systems manufacturers with a services component, and any technology vendor whose contracts include service-level commitments or performance warranties are the core buyers. Enterprise clients frequently require evidence of tech E&O coverage as a condition of a master services agreement before allowing a vendor's software or services into their environment.

What it covers and excludes in practice

Covered claims typically include failure to meet contracted specifications, missed deadlines causing client financial loss, defective code or design errors, failed system integrations, and negligent professional services rendered in connection with delivering the technology. Most policies exclude bodily injury and property damage (addressed under general liability), intentional or knowing misrepresentation of the product's capabilities, and — importantly — data breach, unauthorized access, and network security failures, which fall under a cyber liability policy rather than tech E&O, subject to policy terms and any combined cyber/tech E&O endorsement the carrier offers.

What drives price and how to structure it

Underwriters evaluate contract terms and limitation-of-liability clauses in client agreements, the criticality of the technology to client operations, the insured's software development lifecycle and QA/testing practices, prior claims history, and revenue concentration in a small number of large clients whose losses could be outsized. Buyers can often improve terms by tightening limitation-of-liability language in customer contracts, documenting a formal QA and release process, and coordinating tech E&O limits with any cyber liability program so the two policies dovetail without gaps at the boundary between performance failure and security incident.