Professional Liability

How Much Technology Errors and Omissions Insurance Costs

Even with stringent policies and training in place, company mistakes are bound to happen. Some of these may be egregious enough to warrant a lawsuit from a client. This is why there’s insurance for businesses faced with malpractice civil suits. With respect to technology errors and omissions insurance costs, how much can you expect to pay for this potentially business-saving coverage?

Technology errors and omissions insurance costs can vary greatly depending on a multitude of factors. Find out what influences the premium rates.

What is technology errors and omissions (E&O) insurance?

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E&O insurance is essentially insurance for malpractice. Businesses across all industries, such as law, accounting, and hospitality, utilize E&O insurance. This ranges from Fortune 500 enterprises to small-to-medium-sized businesses. In today’s age where remote work is becoming the norm, technology and SaaS companies are also increasingly relying on E&O insurance.

What does E&O insurance cover?

  • Missed deadlines: This includes clients that incurred losses due to your company not delivering services by the agreed-upon deadline.
  • Undelivered services: This encompasses services that were not delivered or didn’t meet the promised quality assurance.
  • Negligence: An example of this is a cyber-security agency failing to intercept a malware attack that leads to a disruption in the client’s business.

Why do you need technology errors and omissions insurance?

Let’s say you own a web design service. An e-commerce client enlists your service with a written agreement that the website will be up and running by the peak holiday shopping season. Due to unforeseen circumstances, you’re unable to get the site up by the contractual deadline. As a result, the client loses out on potentially thousands of dollars in holiday sales. This leaves your business ripe for a lawsuit.

All it takes is a single successful lawsuit to drive a small company out of business and into bankruptcy. For larger corporations, it could lead to a massive budget loss, resulting in layoffs, reduced hours, and other cutbacks.

E&O insurance covers your legal costs, settlements, and payoffs to plaintiffs.

Cost by industry

E&O insurance costs vary by industry. Some industries are deemed a higher risk than others and incur higher premiums. Here’s a cost breakdown by sector.

  • IT: SaaS and data companies pay an average of $730 per year for a policy covering both professional and cyber liability.
  • Finance and accounting: This is a relatively low-risk niche. Companies pay about $400 in annual fees.
  • Construction and architecture: This is a higher-risk industry due to buildings not being built to code or with incorrect specifications. The insurance cost is $1,705 per year.
  • Real estate: Realty agencies pay around $665 annually. Client lawsuits stem from breaches in contract clauses or failure to disclose property deficiencies.

Technology errors and omissions insurance cost factors

Technology errors and omissions insurance cost factors

Policy rates can vary significantly depending on a combination of multiple factors. Consider the following:


Successful businesses with a higher revenue may be subject to higher coverage rates. Clients are more likely to seek a high monetary claim against larger companies since they have the revenue to pay higher settlements.

Onboarding and training

Insurers may lower rates for companies that have an established and organized training program in place. This includes mandatory refresher courses. Well-trained employees are less likely to make a critical error that can lead to a lawsuit.

Business size

The more employees and clients you have, the greater your risk of a lawsuit. Depending on your industry, you may pay a per-employee rate. For example, you may pay $400 per year for every employee on your roster.


Does your company draft a lengthy contract per client project? Business lawsuits largely come down to the conditions outlined in the contract. Having a detailed contract template may lower your monthly/annual rates. Insurers may request that you revise your contracts to cover certain provisions.

Claims history

Insurers will consider you a high-risk company if your company has a history of lawsuits. It’s the same reason auto insurance agencies charge more for drivers with a history of at-fault collisions or traffic violations.


The location usually doesn’t pertain to tech companies, which tend to serve a global community with remote products like cloud, software, or data warehousing services. However, for other industries, rates are often higher in metropolitan areas with dense populations. 

The Claims Process for Technology E&O Insurance

Facing an errors and omissions (E&O) claim can be a stressful experience for any technology business. However, understanding the claims process and how your omissions insurance coverage works can help you navigate this challenging situation with confidence.

What to Do When a Claim Arises

  1. Notify Your Insurer Immediately: As soon as you become aware of a potential claim or receive a notification of a lawsuit, contact your insurance provider without delay. Most omissions insurance policies require prompt notification to ensure proper coverage.
  2. Gather Documentation: Collect all relevant documentation related to the claim, including contracts, project specifications, communication records, and any evidence that supports your case. This information will be crucial for the insurer's investigation.
  3. Cooperate with the Insurer: Your insurer will likely assign a claims adjuster to investigate the claim. Be cooperative and transparent throughout the process, providing any information or documentation requested.
  4. Legal Representation: If a lawsuit is filed, your insurer will typically provide legal representation to defend you against the claim. Work closely with the assigned attorney to develop a strong defense strategy.

How Technology E&O Insurance Can Help

Your technology E&O insurance policy is designed to protect your business from the financial and reputational risks associated with E&O claims. Here's how it can help:

  • Coverage for Legal Defense: Your insurer will cover the costs of legal defense, including attorney fees, court costs, and expert witness fees. This can be a significant financial relief, as legal expenses can quickly escalate.
  • Settlement and Judgment Costs: If the claim results in a settlement or a court-ordered judgment against you, your insurer will typically cover the liability insurance cost up to the policy limits.
  • Mitigation Expenses: Your policy may also cover expenses incurred to mitigate the damage caused by the error or omission. This could include hiring public relations professionals to manage negative publicity or implementing corrective actions to rectify the issue.
  • Peace of Mind: Knowing that you have omissions insurance coverage in place can provide peace of mind, allowing you to focus on your business operations instead of worrying about potential lawsuits.

By understanding the claims process and the benefits of your cyber liability insurance policy, you can effectively manage tech E&O insurance cost and claims and minimize their impact on your business.

How much E&O insurance do I need?

It’s up to you how much omissions insurance cover you want—it depends on the average settlement amount and legal costs for your given industry. In the tech sector, small-to-medium-sized companies usually aim for $25,000 to $50,000 of coverage. For larger corporations, policies covering up to $1,000,000 per policy term aren’t uncommon.

Deeper Dive into Technology Errors and Omissions Insurance Costs

The technology errors and omissions (E&O) insurance cost for your business will vary widely, depending on factors like the size of your company, the specific services you offer, and your past claims history. However, understanding the average costs and the breakdown of coverage can help you get a clearer picture of what to expect.

Average Technology E&O Insurance Cost

Type of Tech Company

Average Annual Premium

Software Developers

$1,000 - $5,000

IT Consultants

$750 - $3,000

Hardware Manufacturers

$1,500 - $7,500

Managed Service Providers (MSPs)

$2,000 - $10,000

These are just estimates, and your actual premium could be higher or lower. It's crucial to get multiple omissions insurance quote to find the best omissions insurance cover at the most competitive price.

Cost Breakdown: What Your Omissions Insurance Covers

Beyond the base premium, understanding what your omissions insurance covers is crucial. A typical technology E&O insurance policy includes various types of coverage:

  1. Mitigation Expenses: Costs incurred to prevent or minimize the harm caused by an error or omission, such as hiring a public relations firm to manage a reputational crisis.
  2. Defense Costs: Legal fees and other expenses related to defending against a claim, including attorney fees, court costs, and expert witness fees.
  3. Settlements/Judgments: The amount paid to resolve a claim, either through a settlement or a court-ordered judgment.

Each of these components contributes to the overall liability insurance cost for your business. Understanding what's covered can help you choose an omissions insurance policy that best suits your specific needs and risk profile.

It also covers the following:

  • malpractice insurance
  • general liability insurance
  • professional liability insurance

Remember, omissions insurance isn't just about protecting your finances; it's about safeguarding your reputation and ensuring the continuity of your business. By investing in the right coverage, you can focus on innovation and growth, knowing you're protected against the unexpected.

Tips for Getting the Best Technology E&O Insurance Quote

Technology E&O Insurance Quote

Securing the right technology errors and omissions (E&O) insurance is essential for protecting your tech business. But with so many options available, how can you ensure you're getting the best value for your investment? Here are some tips to help you secure the most comprehensive omissions insurance coverage at the most competitive price.

Factors Insurers Consider

In addition to the factors mentioned previously, insurers will also assess several other aspects when determining your technology E&O insurance premium:

  • Risk Management Practices: Demonstrating that you have robust risk management practices in place, such as thorough contract reviews, employee training programs, and quality assurance processes, can help lower your premiums. Insurers view companies with proactive risk management as less likely to face claims.
  • Technology Stack: The specific technologies you use can impact your risk profile. For instance, if you work with emerging or experimental technologies, your insurer might consider you a higher risk than a company that uses well-established tools.
  • Industry Specialization: Some insurers specialize in specific tech niches, such as software development, cybersecurity, or e-commerce. Choosing an insurer with expertise in your industry can often lead to more tailored coverage and potentially lower rates.
  • Deductible and Limits: Your chosen deductible and coverage limits will significantly impact your premium. A higher deductible can lower your premium, but it also means you'll pay more out of pocket if a claim arises. Carefully consider your budget and risk tolerance when selecting these options.

Comparison Shopping: Your Key to Savings

Don't settle for the first omissions insurance quote you receive. It's essential to get multiple quotes from different insurers to compare their offerings. Pay attention to the following:

  • Coverage Details: Look beyond the price tag and carefully examine the policy details. Ensure the coverage limits, deductibles, and exclusions align with your business needs.
  • Additional Coverage: Some insurers offer additional coverage options, such as cyber liability insurance, which can be bundled with your tech E&O policy. Assess whether these additional coverages are relevant to your business and compare their costs.
  • Customer Service and Claims Handling: Research the insurer's reputation for customer service and claims handling. You want a provider who will be responsive and supportive in the event of a claim.
  • Financial Strength: Choose an insurer with a strong financial rating. This ensures they have the resources to pay out claims if needed.

By carefully considering these factors and comparing multiple omissions insurance quotes, you can confidently choose a technology E&O insurance policy that provides the best protection for your business at a competitive price. Remember, protecting your company with the right liability insurance is an investment in its future success.

Get E&O coverage without the hassle

Tech companies serve a diverse demographic. Each one requires coverage unique to its business model. There’s no such thing as a one-size-fits-all policy. That’s why Worth is dedicated to connecting tech agencies with a compatible E&O provider. Get a free quote today and view your rates.

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