2017 May | Page 6

Technology Professional
Liability: Errors and Omissions
Coverage
Every business has unique risks that can seriously harm
an organization’s operations if not properly protected
against. As a business utilizing technology to produce
and deliver products and/or services, it’s important to
recognize and take precautions against risks that your
commercial general liability (CGL) coverage doesn’t
include. Technology professional liability coverage, also
referred to as tech errors and omissions (E&O), is
essential for companies using technology because it
addresses a lack of protection in CGL policies, which
typically do not cover claims of third-party financial
harm.
litigation.
Tech E&O coverage would apply in the following
situations:
• A mistake was made and an error in the code of a
website or program your company produced isn’t
found before it is implemented. A third party
depends on this product or service to operate its
business and its operations are stalled due to the
error, causing them a financial loss.
• A part your company produces is installed in a piece
of equipment. After a short amount of time, the
component simply stops working, causing the
equipment to fail to work, but otherwise not
damaging anything or hurting anyone. The third
party that relies on this equipment for its business
has to stop operations and suffers a financial loss.
• An employee of your company recommends that a
client make an adjustment to its network. The client
follows the advice and its network crashes as a
result, causing a time and financial loss for its
operations.
Who needs Tech E&O Coverage?
Not only technology industry businesses have
technology-related risks. Most companies today utilize
technology in some part of providing a service or
product and need to take the necessary precautions. To
ensure your company is covering all bases, a full risk
management assessment is needed.
What does Tech E&O cover?
Tech E&O manages risks, resulting from providing a
product or service to a third party, that are not covered
by a CGL policy. Specifically, tech E&O protects your
business in the event that a third party suffers a financial
loss due to your product or service not performing as it
was intended or expected, including the event of an
error or omission committed by your company. These
policies also cover defense costs in the event of
In all of these cases, CGL coverage would not cover a
claim or any costs of litigation because of the presence
of an error and the lack of resulting physical damage to
the third party’s property. It should be noted that tech
E&O policies usually exclude product recall, but some
will accept damages for loss of use of a failed product.
Provided by Marshall & Sterling Insurance
This Coverage Insights is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal
counsel or an insurance professional for appropriate advice. © 2011, 2014 Zywave, Inc. All rights reserved.