What technology E&O actually covers
Technology errors and omissions (tech E&O, sometimes called technology professional liability) covers claims that your technology product or service failed to do what you said it would and a customer lost money as a result. Typical triggers:
- An outage breaches an uptime commitment in your service agreement.
- A defect in your software causes a customer's transactions to process incorrectly.
- A missed implementation deadline costs the customer a contract.
- Your integration corrupts a customer's data.
- Alleged infringement of someone's copyright or trademark in your product (patent is usually excluded or limited).
The policy pays defense costs and settlements or judgments. Defense is often the larger number: even a claim you win costs real money in a dispute with a large customer.
Tech E&O vs cyber vs general liability
Founders often conflate these. They answer different questions.
- General liability asks: did you physically injure someone or damage their property? For a software company the exposure is small (an office visitor trips), but landlords and some customers still require it. It specifically excludes professional services and software failure.
- Tech E&O asks: did your product or service fail and cost a customer money?
- Cyber liability asks: was there a security or privacy event? Breach of data you hold, ransomware, business interruption from an attack, extortion payments, forensic and notification costs, regulatory fines where insurable, and liability to the people whose data was exposed.
For technology companies, carriers package tech E&O and cyber in one policy because a single incident often triggers both: a breach of your platform (cyber) that also takes your service down for customers (E&O). Buying them separately from different carriers invites a coverage gap where each insurer points at the other.
What enterprise contracts and investors require
The moment your insurance stops being optional is the first enterprise master services agreement. The insurance clause usually asks for:
- Tech E&O / professional liability: $1,000,000 to $2,000,000 per claim is the common ask; $5,000,000 appears once you sell into financial services, healthcare or large public companies.
- Cyber / network security and privacy: the same range, sometimes higher if you process payment or health data.
- General liability: $1,000,000 per occurrence, often with the customer as additional insured.
- Workers' compensation at statutory limits once you have employees, including in New York for remote staff based here.
- Umbrella occasionally, following form over GL and auto.
Investors add a different layer. A term sheet or closing checklist from an institutional round typically requires directors and officers (D&O) coverage, because investors taking board seats want protection for decisions made in that role. Employment practices liability (EPL) usually comes alongside, since wrongful termination and discrimination claims are the most frequent management claims a young company faces.
What to buy, stage by stage
Pre-seed and seed
Tech E&O and cyber combined, at $1,000,000, as soon as you have paying customers or handle customer data. General liability if a lease or customer requires it. Workers' compensation as soon as you have employees. This package is inexpensive relative to a single dispute and is often the gating item for a first enterprise customer.
Series A
D&O with EPL, usually at $1,000,000 to $3,000,000, triggered by the investor's closing conditions. Raise E&O and cyber to the limit your largest contract now asks for. Add hired and non-owned auto if staff drive for work.
Series B and beyond
E&O and cyber at $5,000,000 or more, often in layers. D&O towers grow with valuation. Fiduciary liability once there is a 401(k). Key-person, crime and international coverage as the footprint demands. At this stage the program is reviewed annually against the customer contracts in the pipeline, not the ones already signed.
Policy terms that decide claims
- Claims-made and retroactive date. Tech E&O and cyber are claims-made. The policy covers claims made during the policy period for work after the retroactive date. Never let the retroactive date move forward at renewal; it erases coverage for your past work.
- Contractual liability. Confirm the policy covers liability you assume under your service agreements, including indemnities and SLA credits where available.
- Definition of technology services. It should describe what you actually sell, including any consulting or implementation work.
- Dependent business interruption. Cyber coverage for an outage at your cloud provider, not just at you.
- Regulatory and PCI coverage. Investigations, fines and penalties where insurable, and card-brand assessments if you touch payments.
- Security questionnaire accuracy. Multi-factor authentication, backups and endpoint protection answers are warranties. An inaccurate answer is the most common reason a cyber claim is denied.
IMD reads the insurance clause in your customer contract and builds the program to match it, then issues the certificate your customer's procurement team expects. See the SaaS and startup insurance page or send us the MSA.
Frequently asked questions
What does tech E&O cover?
Claims that your software or technology service failed, was defective, missed a deadline or caused a customer financial loss. It pays defense and damages, and is normally packaged with cyber.
How is it different from cyber insurance?
E&O responds to product or service failure claims from customers. Cyber responds to breaches, ransomware, attack-related downtime and privacy liability. Most SaaS companies need both.
How much coverage does a startup need?
Whatever the largest customer contract requires, which is usually $1,000,000 to $2,000,000 early and $5,000,000 once you sell to regulated or large enterprises.
General information, not legal advice. Policy forms vary by carrier; the issued policy controls.