If you build software or run a tech-enabled service, you’ve probably wondered whether Technology Errors & Omissions (Tech E&O) or Cyber Liability should be your primary line of defense. The truth: they protect against different (often complementary) risks. This guide uses short tables and scenario flows so you can see—at a glance—which policy responds, why, and where you may need both.
The quick answer
- Cyber focuses on the impact of a cyber event (ransomware, data breach, BEC, system outage) to you and others—first-party expenses plus third-party liability.
- Tech E&O focuses on professional mistakes in your tech product or service that harm customers (e.g., a buggy release, failed implementation, missed SLA), even without a breach.
Most tech companies carry both to close gaps between operational security incidents (Cyber) and professional liability (Tech E&O). For help bundling both with your broader commercial program, see SeedPod’s All-Lines Insurance for Tech Companies. Full Coverage for Tech
At-a-glance comparison
| Dimension | Cyber Liability | Tech E&O |
|---|---|---|
| Core trigger | Cyber event (breach, ransomware, BEC, outage from attack) | Error/omission in tech product/service causing client loss |
| First-party costs (you) | Yes: forensics, legal, PR, restoration, BI, ransom, extortion, notification, credit monitoring | Typically No (unless added by endorsement); emphasis is third-party claims |
| Third-party liability | Yes: privacy liability, network security liability, regulatory actions | Yes: client contractual liability, negligence, failure of tech services/products |
| Examples | Ransomware locks systems; BEC wires diverted; PII exposure | API bug causes customer downtime; botched migration corrupts data |
| Who needs it most | Any org with data/systems exposure | Software, SaaS, MSPs, IT consultants, tech implementers |
| Typical exclusions | Prior known incidents, poor security hygiene, certain fines | Fraud, IP disputes (unless added), intentional acts |
| Ideal use | Transfer risk of cyberattacks and their fallout | Transfer risk of performance failure of your tech |
Reality check: forms vary by carrier—always review your specific wording and endorsements.
Real-world scenario flows
Each flow shows: Incident → First-party impact → Third-party impact → Likely responder(s)
1) SaaS outage from a buggy release (no external attack)
- Incident: Weekend deploy introduces a memory leak; multi-tenant outage for 11 hours.
- First-party impact: Lost revenue; engineering hotfix costs.
- Third-party impact: Customers claim SLA credits and business interruption losses.
- Likely responder(s): Tech E&O for customer claims; Cyber generally not triggered absent a security failure.
- Notes: Many E&O forms address failure to render services; check SLA/limitation of liability language.
2) Ransomware encrypts production and backups
- Incident: Threat actor deploys ransomware, encrypting VMs and snapshots.
- First-party impact: Forensics, restoration, potential ransom, business interruption.
- Third-party impact: If customers’ data or services are affected, they may assert damages.
- Likely responder(s): Cyber (first-party + third-party). E&O only if clients allege negligent service causing their loss (less common here).
3) MSP pushes a bad script that wipes client file shares
- Incident: Automation script error deletes volumes across 12 client tenants.
- First-party impact: Overtime, remediation costs.
- Third-party impact: Multiple clients seek consequential damages for downtime and data loss.
- Likely responder(s): Tech E&O for client claims; Cyber may respond if an attack also occurred (e.g., exploited the misconfig).
4) Misconfigured S3 bucket exposes PII (no attack needed)
- Incident: Dev team leaves a storage bucket public; data is indexed and downloaded.
- First-party impact: Forensics, notification, credit monitoring, PR, legal.
- Third-party impact: Privacy suits, regulator inquiries.
- Likely responder(s): Cyber (privacy and security liability + response costs). Tech E&O may respond if a client alleges your professional error breached contractual duties.
5) BEC/social engineering drains customer funds
- Incident: Finance receives spoofed vendor update; wires $480k to threat actor.
- First-party impact: Funds transfer loss; incident response.
- Third-party impact: Vendors/clients dispute liability.
- Likely responder(s): Cyber (if “funds transfer fraud/social engineering” is endorsed). Tech E&O less likely unless the loss stems from a failure in services owed to a client.
6) Integration project misses critical deadline, causing client penalties
- Incident: Your team’s delays mean client misses its launch window and key contractual milestone.
- First-party impact: Re-work, staffing costs.
- Third-party impact: Client claim for financial loss under MSA.
- Likely responder(s): Tech E&O (classic failure-to-render claim). Cyber typically not applicable.
Coverage blueprint for modern tech companies
Use both policies to cover distinct but adjacent risk surfaces:
- Start with Cyber to handle attack-driven costs and liabilities (ransomware, BEC, privacy events).
- Add Tech E&O to address service/product failure risks (SaaS downtime, bad code, failed implementations).
- Tune endorsements: social engineering/funds transfer fraud (Cyber), media/IP, contingent business interruption (Cyber), carve-backs for contractual liability (E&O).
- Harmonize limits/retentions so a single medium-severity event doesn’t consume your full tower.
When you’re ready to place both seamlessly alongside D&O, EPLI, GL, Property, and more, explore SeedPod’s All-Lines Insurance for Tech Companies (one partner, total protection). SeedPod Cyber
FAQ
Is Tech E&O the same as Professional Liability?
Tech E&O is a specialized form of professional liability tailored to technology products and services. It’s designed for software publishers, SaaS, MSPs, and IT consultants.
Do I still need Cyber if I have Tech E&O?
Yes—many of the most expensive loss drivers (ransomware, BEC, privacy breach response) are best handled by Cyber. E&O addresses different triggers (errors/omissions in your tech services).
Can a single incident trigger both policies?
It can. Example: a misconfigured environment (E&O) that also causes a data exposure (Cyber). Your broker should coordinate wording to avoid gaps and finger-pointing.
Implementation checklist (save for renewals)
- Confirm attack-driven exposures are in Cyber (incl. social engineering/funds transfer fraud endorsement).
- Confirm service-failure exposures are in Tech E&O (failure to render services, product failure, negligent design).
- Align SLA/contract language with insurability (caps, exclusions, notice).
- Document incident response partners and panel vendors in advance.
- Test restore, run tabletop, and retain proof—use it at underwriting.
Other Resources
- All-Lines Insurance for Tech Companies (Cyber + Tech E&O) — One partner for Cyber, Tech E&O, and the rest of your commercial program. Full Coverage for Tech
- Comprehensive Cyber Coverage — What a modern cyber policy can include (first-party and third-party). Coverages
- SeedPod Tech E&O Program — Built for software/SaaS, MSPs, and tech services. Tech E&O