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Why Errors & Omissions Insurance Is So Important for IT Consultants


Information Technology Errors & Omissions Insurance Takes the Byte Out

Why Errors & Omissions Insurance Is So Important for IT Consultants

IT professionals and firms are among the most vulnerable to Errors & Omissions (E&O) claims. This includes software designers and developers, custom smartphone app developers, IT consultants, systems engineers, web masters, network administrators and any professionals who build, repair, design or administer computers and IT systems.

E&O claims arise out of the work you perform – a mistake or negligent act that leads to a financial loss for a client. Even IT firms and professionals who best practices and have skilled employees with years of experience can find themselves embroiled in a lawsuit that involves accidental data deletion; programming errors; improper selection, installation or configuration of network systems; the transmission of malicious code or destructive programs; data breaches and other damages resulting from a failure of the work performed.

What puts IT professionals and firms even in a more difficult situation is that many clients don’t understand the intricacies of what you do, therefore, often project expectations with the client may not be in sync. You may believe that the work you performed on their behalf indeed addressed the requirements of the client’s contract, but your client may see it completely differently, claiming you didn’t deliver what they expected, or missed a deadline that caused them to spend additional monies. Moreover, as information technology consultants, you are asked to take care of everything on your client’s network, including providing safeguards to prevent unauthorized access (hacking). Anything can go wrong, which may cause a system-wide crash or data to be destroyed. In these types of incidents and many others is when IT E&O insurance or Professional Liability coverage responds.

How Does E&O Insurance Work?

Errors & Omissions insurance for IT professionals in many ways is like medical malpractice coverage for physicians. It is designed to protect you in the event that your clients allege that your actions or inactions are responsible for any damage done. E&O insurance covers the costs of your legal defense and any settlements or judgments – up to the limits of the policy – that may be assessed against you in a court of law. The bottom line is that E&O insurance is designed to protect your bottom line – your personal and business assets in the event of a lawsuit alleging negligence or an error or omission on your part while performing your services.

Some policies can be designed to provide legal defense costs outside of liability limits, meaning your lawyer fees won’t eat away at what’s available to pay settlements or damages. Prior Acts Coverage may also be available with certain policies. This transfers the retroactive date for an old policy to a new insurance company so that you have continuous coverage with no gaps.

Errors & Omissions insurance for IT consultants provides you with peace of mind and protects your earnings today and into the future. We specialize in E&O insurance at Axis Insurance Services and can provide you with a comprehensive program to properly protect your IT firm. Please give us a call at (877) 787-5258.

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Blogged on: June 19, 2014 by Mike Smith
Error Omissions
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