The Importance of Technology E&O Insurance for Small Business Owners
Dan Levenson September 02, 2014
It is important for your starting company to keep the business going by protecting your assets. Having coverage through the basic types of insurance for small business owners can indeed help, but if you are planning to become a player in the technology industry, the basics cannot provide sufficient protection for your business. An article by Smart Business contributor Amy Dison highlighted the important role of errors and omissions (E&O) liability insurance:
In the ever-changing technology industry, it’s a fact that products and services may fail to perform as expected. Many technology companies do not realize their general liability policy does not protect their business against failure causing financial injury to a third party, such as a customer or vendor…
Dealing with technology can bring both convenience and problems at the same time. If your company handles a large volume of work that requires expertise in information technology, errors are bound to happen even if you have skilled employees. And when mistakes that inflict severe damage to your customers do occur, you can expect lawsuits to flood your office. Dealing with these can be very expensive, but not with E&O insurance.
E&O insurance protects your technology company from claims and suits stemming from your products and services. This insurance also gives you funds to pay off court judgments that are covered in your policy. Since product and service complaints are common in the industry, you have to make sure that your company can still operate even after incidents such as data theft/deletion or damage to clients’ hardware.
As an owner of a technology business, you must be aware of these kinds of problems since they can arise at any time. Also, the rate of development in the technology sector is so rapid as to make predicting failures and mistakes all but impossible. Small business owners who tend to ignore E&O insurance end up shedding a significant amount of money when they commit errors such as releasing substandard products, hurting their profit and their reputations.
Running a technology-based business requires technology-based protection. Basic packages like general liability insurance cannot cover IT-specific aspects such as lost data or stolen/hacked information. Approach your trusted technology insurance company to learn more about E&O insurance.
(Source: E&O Insurance for tech companies, Smart Business)