By Ryan Windt | Head of Growth Marketing | Updated April 2026
If you run a technology company, a software firm, or a managed service provider, you have probably seen the term Technology Errors and Omissions insurance on a contract, a vendor questionnaire, or a renewal checklist. You may have even purchased it without being entirely sure what it covers or how it differs from the cyber insurance policy sitting next to it in your insurance portfolio.
This guide explains what Technology E&O actually is, what it covers, who needs it, how it works alongside cyber insurance, and what underwriters evaluate when writing it.
The Short Answer
Technology Errors and Omissions insurance covers claims that your technology product or service failed to perform as promised and caused a client financial harm.
If a software bug in your platform causes a client to lose data. If your managed services agreement promised 99.9% uptime and a misconfiguration on your end took a client offline for two days. If your cybersecurity product failed to detect a threat it was supposed to catch and a client suffered a breach as a result. These are Technology E&O scenarios.
Cyber insurance covers losses from security incidents: breaches, ransomware, business interruption from an attack, notification costs, and regulatory exposure. Technology E&O covers professional liability: the financial harm your product or service caused a client when it did not work the way it was supposed to.
Both are essential for technology companies and MSPs. They cover different things, and having one without the other leaves a significant gap.
What Technology E&O Insurance Covers
Technology E&O is a liability policy. It protects you against claims made by clients, customers, or third parties who allege that your technology product, software, platform, or professional services caused them financial harm.
Errors in your product or deliverable. A software bug that corrupts client data. A miscalculation in your SaaS platform that generates incorrect financial reports. A flaw in custom code you delivered that causes downstream system failures. If your technology did not perform as represented or contracted, and a client suffered a financial loss as a result, that is an errors and omissions claim.
Omissions and missed deliverables. A feature your team promised but did not deliver. A milestone you missed that caused a client to lose a contract. A service level agreement you failed to meet. Technology E&O covers the financial claims that follow when what you promised is not what you delivered.
Professional services failures. Technology E&O extends beyond software products to professional services. If you are an MSP that recommended and implemented a solution that did not work, a consultant who designed an architecture that failed, or a cybersecurity firm whose monitoring missed a threat, the resulting client claims fall under Technology E&O.
Defense costs. Even when a claim against you has no merit, defending it costs money. Technology E&O covers legal defense costs regardless of whether the underlying claim is ultimately valid. This is often where the most immediate value shows up. A groundless lawsuit from a disgruntled client can cost $50,000 to $200,000 to defend before a single dollar in damages is ever established.
Settlements and judgments. If a covered claim results in a settlement or a court judgment against you, Technology E&O covers those amounts up to your policy limit.
What Technology E&O Does Not Cover
Technology E&O is a liability policy, not a first-party policy. It covers claims made against you, not losses you suffer directly.
Your own losses from a cyber incident. If your systems are breached, ransomware hits your infrastructure, or you suffer a business interruption from an attack on your own environment, that is cyber insurance territory. Technology E&O does not cover your first-party losses.
Bodily injury or property damage. Technology E&O covers financial harm, not physical harm. If a failure in your technology causes physical injury or property damage, that may fall under general liability, not E&O.
Intentional acts. Claims arising from fraud, intentional misrepresentation, or deliberate wrongdoing are excluded.
Prior known claims. Technology E&O is a claims-made policy. Coverage applies to claims made during the policy period arising from incidents that were not known prior to the policy inception. If you knew about a problem before you bought the policy and a claim later arose from it, that claim is typically excluded.
Contractual liability beyond what the law would impose. If you accepted contractual obligations that go beyond your standard professional liability, Technology E&O may not cover the excess exposure you assumed by contract.
Who Needs Technology E&O Insurance
Any company that sells, builds, maintains, or delivers technology products or services to clients should carry Technology E&O. The exposure is not limited to large software companies.
Managed service providers. MSPs take on explicit service obligations through their managed services agreements: uptime guarantees, security responsibilities, backup and recovery commitments, help desk response times. When those commitments are not met and a client suffers a loss, the resulting claim is a Technology E&O matter. For MSPs that have also taken on security monitoring or threat detection responsibilities, the overlap with cyber liability is significant and both policies are necessary.
Software as a service companies. If your platform processes client data, runs client operations, or integrates into client workflows, a failure has downstream financial consequences for your customers. SaaS companies face Technology E&O exposure on every contract they sign.
IT consultants and systems integrators. Recommending the wrong solution, implementing a system that fails, or designing an architecture with a flaw that surfaces later all generate professional liability exposure. Consultants who do not carry Technology E&O are personally exposed if a client decides to pursue a claim.
Cybersecurity firms and MSSPs. If your business model includes an explicit security mandate, whether that is SOC monitoring, vulnerability management, penetration testing, or incident response, your clients have a reasonable expectation that your services will prevent or detect threats. When a client suffers a breach that your services were supposed to prevent, Technology E&O is what covers the resulting claim. For a deeper look at the insurance considerations specific to managed security service providers, see our post on cyber insurance for MSSPs.
Web developers and digital agencies. Agencies that build websites, applications, or digital products for clients carry E&O exposure if those products fail to perform. An e-commerce site that goes down, a client portal with a security flaw, or a custom application that does not meet specifications can all generate claims.
Technology staffing firms. If you place technology professionals with clients and warrant their qualifications or output, you may carry Technology E&O exposure for work product delivered by your placements.
How Technology E&O and Cyber Insurance Work Together
This is where most technology companies and MSPs get confused. The two policies cover different things, and both are necessary.
A useful way to think about it: cyber insurance covers what happens to you. Technology E&O covers claims from what happened to your client because of you.
Example 1: Your MSP suffers a breach. An attacker compromises your RMM platform and uses it to push ransomware to client environments. Your cyber insurance covers your own forensic costs, breach notification, business interruption, and regulatory exposure. Your Technology E&O covers the claims your clients bring against you for the damage done to their environments through your systems.
Example 2: Your SaaS platform goes down. A misconfiguration causes your platform to be unavailable for 18 hours, and a client misses a critical deadline as a result. They sue you for $400,000 in lost contract revenue. Cyber insurance does not cover this because it was not a security incident. Technology E&O covers the claim.
Example 3: Your security monitoring missed a threat. A client suffers a ransomware attack and argues that your MSSP failed to detect indicators that your contract promised you would catch. The resulting lawsuit involves both professional liability (Technology E&O) and potentially cyber liability exposure depending on how the claim is structured.
Many carriers now offer Technology E&O and cyber liability as a combined policy form, which reduces gaps and simplifies administration. At SeedPod Cyber, we write both coverages and can structure them together for technology companies and MSPs. See our coverages page for details.
What Underwriters Evaluate When Writing Technology E&O
Technology E&O underwriters are evaluating your professional liability exposure: the complexity of your contracts, the nature of your service obligations, and your internal quality controls.
Contract terms and service level agreements. Underwriters review the obligations you have accepted in client contracts. Aggressive SLAs, broad indemnification clauses, and uncapped liability provisions all increase your exposure. If your contracts routinely accept obligations that exceed what your policy limits can support, that is a problem worth addressing before your next renewal.
Revenue and client concentration. How much of your revenue comes from your largest client? A single large client that accounts for 50% of revenue creates a concentration risk that underwriters price accordingly. A claim from that client has disproportionate potential severity.
Claims history. Prior E&O claims are the strongest predictor of future claims. A clean loss history is a meaningful underwriting positive. If you have had prior claims, carriers want to understand what remediation steps you took.
Quality control and testing processes. Underwriters look for evidence that you have internal processes for catching errors before they reach clients. Code review procedures, QA testing, documented change management, and structured implementation methodologies all reduce your claim probability and your rate.
The nature of your technology. A company delivering low-stakes marketing tools carries a different E&O profile than one delivering financial software, healthcare technology, or critical infrastructure management tools. The more consequential a failure of your product would be for a client, the more scrutiny underwriters apply.
Security controls. Because Technology E&O and cyber liability overlap significantly for technology companies, underwriters evaluating E&O often consider your security posture as well. MFA deployment, EDR coverage, incident response planning, and backup practices are relevant to both.
How Much Does Technology E&O Insurance Cost
Premiums vary based on revenue, the nature of your technology, your contract terms, and your claims history. General ranges for technology companies and MSPs:
| Company Type | Annual Revenue | Typical Annual Premium |
|---|---|---|
| Small IT Consultancy / MSP | Under $2M | $2,000 to $5,000 |
| Mid-Size MSP / SaaS Company | $2M to $10M | $5,000 to $15,000 |
| Growing Tech Company / MSSP | $10M to $50M | $15,000 to $40,000 |
| Established Tech / SaaS Platform | $50M+ | $40,000 to $150,000+ |
Combined cyber and Technology E&O policies are often more cost-effective than buying the two coverages separately, and they reduce the risk of gaps between the two policy forms. For a broader look at how your cyber coverage is priced, see our 2026 cyber insurance pricing guide.
Frequently Asked Questions
Is Technology E&O the same as professional liability insurance?
Technology E&O is a form of professional liability insurance specifically designed for technology companies. Standard professional liability (sometimes called E&O for non-tech industries) covers professional services failures in fields like law, accounting, and consulting. Technology E&O extends that concept to cover technology products, software, and tech-specific service obligations. They are structurally similar but the coverage forms are different and not interchangeable for tech businesses.
Do I need both Technology E&O and cyber insurance?
Yes, if you are a technology company or MSP. Cyber insurance covers your first-party losses from security incidents and your third-party liability for data breaches affecting your clients. Technology E&O covers claims from clients who allege your product or service failed to perform. The two policies cover different categories of loss. Relying on one without the other leaves gaps that can be expensive to discover at claim time.
What is a claims-made policy and why does it matter?
Technology E&O is typically written on a claims-made basis, meaning coverage applies to claims made during the policy period, not when the incident occurred. This is different from occurrence-based policies. The practical implication: if you cancel your Technology E&O policy and a client later files a claim for work you did during the covered period, you may not have coverage unless you purchased an extended reporting period (tail coverage). When changing carriers, make sure you understand how prior acts are handled.
Does Technology E&O cover a data breach at my company?
Not directly. A breach of your own systems is a first-party loss covered under cyber insurance. However, if that breach exposed client data and your clients bring claims against you for failing to protect their information, those third-party claims may trigger both your cyber liability coverage and your Technology E&O coverage depending on how the claims are structured. This is exactly why having both policies, ideally from a single carrier who can coordinate the response, matters.
What limits should a small MSP carry?
Most small MSPs start with $1M per occurrence / $1M aggregate. Whether that is adequate depends on the size of your client contracts and the obligations you have accepted in your MSAs. If your largest client contract involves a multi-million dollar environment and your MSA accepts broad indemnification language, $1M may not be sufficient. A review of your largest client contracts is the right starting point for determining appropriate limits.