Every business should carry general commercial liability insurance. This type of insurance protects companies from potentially devastating financial risk due to possible liabilities of the company. However, if your business functions in the field of information technology, you will need additional insurance to cover IT liabilities such as programming errors, contract performance failures, and software malperformance.
Errors related to IT can be very costly to your clients. Defects in software or devices can slow down or even stop your client’s productivity. Should a client’s network be hacked due to code written by you or your employees that failed to adequately contain it against security vulnerabilities, they may reasonably file a suit against you for financial losses suffered as a result. Even if a claim is denied, you will still be financially impacted, having had to cover legal defense fees. What’s more, should you or your employees make a serious IT error, whether intentional or not, that results in a claim, the costs incurred to defend yourself and to satisfy any resulting judgments could be financially devastating.
Insurance for technology errors and omissions exists to protect you in such instances. This additional commercial liability coverage protects you in a wide variety of IT service related circumstances. With such coverage, not only you and your company are covered. Typically, any W2 employees and 1099 subcontractors are also covered under your technology errors and omissions policy. Carrying such a policy as part of your commercial insurance portfolio will further protect you against potentially devastating liabilities.