E&O Further Reading
Technology Errors and Omissions vs. General Liability Insurance

Before you started an IT business, you probably never thought much about small business insurance policies like Technology Errors and Omissions Insurance and General Liability Insurance.

But if you're like Insureon's tens of thousands of tech clients, you've found yourself trying to sort out the differences between these policies, what they cover, and why clients might require you to have them.

That's a lot for first-time business owners to sort out. Do you really need both, or either, for that matter? Let's look at each policy for a breakdown and comparison.

Technology E&O Insurance: Professional Liability Coverage

Technology E&O Insurance: Professional Liability Coverage

Say a client alleges you've made a mistake or committed an error of omission and files a lawsuit against your business. What does that mean? If a client thinks you should have done a better job or your IT failed to perform as promise, this type of lawsuit may be covered under Errors and Omissions Insurance (also called Professional Liability Insurance).

Need an example when E&O may come in handy? Here are five common scenarios involving IT Errors and Omissions claims:

In these cases, Errors and Omissions Insurance may pay your legal expenses, attorney fees, and settlement or judgment costs.

General Liability Insurance: Basic Insurance Coverage for IT Companies

General Liability Insurance: Basic Insurance Coverage for IT Companies

General Liability Insurance can cover lawsuits when a third party (i.e., non-employee) claims your IT business damaged their property, caused an injury, or damaged their reputation. Maybe you've heard other business owners worry about "slip-and-fall" accidents. General Liability Insurance is sometimes called slip-and-fall insurance because it can cover these random accidents and injury lawsuits.

Here are four possible situations that could lead to a GL lawsuit:

  • A client trips over loose cords at your office, needing immediate medical attention.
  • A deliveryman slips on the icy sidewalk outside your office while delivering a package.
  • You visit a client's server room on a tour, bump into a server rack, and damage the client's tech.
  • A contractor claims you've injured their reputation after you made comments about their work to a client.

While E&O covers professional risks, GL covers more basic accident and injury liabilities. Clumsy accidents, damaged property, advertising injury – no matter what industry you work in, you could find yourself having to pay for an expensive General Liability lawsuit.

Client Contracts May Require Insurance to Do Business

Client Contracts May Require Insurance to Do Business

In their contracts, clients may specifically require you to have small business insurance. Take a minute to think about things from a client's perspective.

Your client is worried that you might mess something up. If you botch your IT, what then? If you have E&O, your client knows that an insurance carrier is backing your work and may help you pay the damages you owe the client if they sue you.

Clients, landlords, and business partners may also want you to have General Liability Insurance. As mentioned earlier, this coverage can pay for reparations you might owe if you damage their property, injure their reputation, or cause an injury.

Small business insurance shows clients that…

  • You're financially sound.
  • You're serious about your professional services.
  • You can give them reassurance that if something goes wrong, you've got a top-rated insurer to help pay for the legal mess.

If you're looking for coverage, be sure to check out "How Much Does Technology Errors and Omissions Insurance Cost?"

Grab-n-Go Information

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