E&O Further Reading
How to Meet Technology E&O Insurance Contract Requirements

As an IT contractor, you might not have known anything about technology Errors and Omissions Insurance (aka Professional Liability Insurance) until you saw the requirement in your consulting agreement. That's fairly common. Tech professionals often have to learn on the fly when it comes to their small business insurance.

This article aims to help you figure out what IT E&O is, how it works, and how to get it.

How to Meet E&O Insurance Contract Requirements

How to Meet E&O Insurance Contract Requirements

You've gone back and forth with a client for weeks when you finally get the contract. Before you can sign on the dotted line, the client says you need to have Technology Errors and Omissions Insurance. Okay, what now?

If you're like other IT consultants, you may search online and find that there's a ton of confusing information out there about tech insurance. Puzzled, you're not sure which technology E&O policies (and which carriers) are right for your business.

When you sign up for insurance, it's helpful to work with insurance agents that know IT. In your line of work, you know technical expertise is important. The same holds true in IT insurance. Good agents can help you find quality insurance quickly.

Not to toot our own horn, but we've insured over tens of thousands of IT companies and pride ourselves on being able to answer your coverage questions quickly and get you covered ASAP.

If you need insurance as soon as possible, here's how to get it:

  • Explore our online insurance application.
  • Fill in information about your company (e.g., projected revenue, claims history, how long you've worked in IT, etc.).
  • Choose a coverage limit (e.g., $1 million) that matches the requirement in your contract.
  • Click submit.
  • Read your free insurance quotes from top-rated carriers.

At this point, you may have questions about your coverage options, which is why it's helpful to work with IT insurance agents who can make sure you find insurance that balances quality coverage with affordable deductibles and premiums.

Why Clients Require IT Contractors to Have E&O Insurance

Why Clients Require IT Contractors to Have E&O Insurance

You may have also wondered why your clients want you to have technology Errors and Omissions Insurance in the first place. And the answer has to do with the way a client's financial risks are tied to your work. Here's what we mean.

Say you help a client find enterprise resource management software. A year after using this software, the client gets fed up with problems with the technology and decides to sue, claiming the tech was a bad fit. How much could they really sue you for? A lot.

Here's the thing, if clients have a problem with technology – whether it's a data breach or a productivity issue – they can sue for the cost to:

  • Replace the technology.
  • Make up for lost productivity.
  • Cover other damages.

For more liability risk exposures, see "5 Common IT Behaviors that Can Trigger E&O Lawsuits").

E&O Insurance can pay for the cost of a lawsuit, including court costs, attorney fees, and damages. That's why your clients want you to have E&O coverage. If a client sues you, they want you to have insurance that will pay for a "judgment," which is the court-ordered payment you may owe the client for the damages and losses caused by your tech.

Technology Errors and Omissions Insurance may protect your company from huge legal costs, but it also reassures your clients that expensive IT mistakes might be covered. For more on written agreements with clients, see "Essential Contracts for IT Businesses."

IT Liability Is Complicated; Make it Simple

IT Liability Is Complicated; Make it Simple

IT liability can be complicated, but we hope this article cleared up a few things about E&O requirements in your client contracts. To learn more about contract liabilities, be sure to check out "Get It in Writing: The IT Professional's Guide to Essential Contracts," our risk management eBook.

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