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Reducing E&O Liabilities for IT Businesses

Reducing E&O Liabilities for IT Businesses

IT consultants are hired to analyze, repair or create IT systems and structures for other businesses or organizations. They are even commonly tasked with more specific things such as writing code, installing programs and setting up hardware. Essentially, IT businesses focus on protecting other businesses from technological problems so that they can run smoothly. As business technology changes and evolves, IT consultants are taking on more and more responsibilities, which means they are also taking on more and more liabilities.

Errors and Omissions (E&O) coverage is one of the most important types of liability insurance for IT professionals, as well as any other professionals who provide services to other organizations. E&O coverage helps cover the cost of a lawsuit when a client sues you over a mistake or oversight that caused them a financial loss. Even if a client’s financial loss wasn’t your fault, defending the claim is costly enough. Below are three common types of E&O exposures for IT businesses and how to mitigate them.

1. Miscommunications and Misunderstandings

IT professionals are proficient in language that can sometimes seem foreign to their clients. Some clients can be particularly stubborn when it comes to understanding the technology you are implementing, especially if their expectations are more ambitious than the software or hardware you have set up for them. Try to get a thorough understanding of exactly what the client needs and expects from you, and ensure that clients are clear about what your IT services can and can not do for them so that there are no misunderstandings on both sides.

2. Client Misuse of Technology.

Once you’ve set a client up with technology, what they do with it is on them, right? Unfortunately, it is possible for an IT business to be sued by a client for said client misusing technology that the IT business set up for them. For example, if you install a complex program but don’t thoroughly educate clients about on how to properly use it, you could be liable for damages incurred as a result of misuse of the program. Before you leave the client to operate the technology that you’ve installed for them, make sure they are proficient at using it.

3. Recommended Technology Gone Wrong

A recommendation or endorsement of a certain technology can put serious liability on an IT professional. If it doesn’t work right, or causes a disruption of business or data breach or loss, the client may turn around and sue you for recommending it.

Even the best IT professionals make mistakes. Unfortunately, a simple mistake such as a mistake in your coding or an oversight during a security scan can have costly repercussions for an IT consultant. If that mistake caused a financial loss for your client, they are likely to sue your business over it, and without E&O coverage, you would be left to pay for it yourself.

About Axis Insurance Services

Axis Insurance Services specializes in providing employers with EPLI coverage and would be happy to discuss this must-have protection with you, particularly critical in today’s litigious environment. Just give us a call at (201) 847-9175.

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Blogged on: October 31, 2018 by Mike Smith
Error Omissions
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