Technology Companies Coverage Guide
Tech companies face unique risks: client data exposure, software failures causing downstream losses, IP disputes, and rapid scaling that outpaces coverage. Traditional policies often have tech-specific exclusions.
Critical Coverage
Professional Liability (E&O)
Covers claims of negligence or mistakes in professional services
What it covers
Claims that your professional services — software development, consulting, implementation, managed services — caused financial harm to a client. Covers defense costs, settlements, and judgments for allegations of negligence, errors, omissions, or failure to deliver.
Common misconception
Tech founders think E&O is only for consultants or accountants. If you build software, provide SaaS, or offer any technology service, and that service fails or causes a client to lose money, you face E&O exposure. Your GL policy explicitly excludes 'professional services' claims.
What it does NOT cover
Intentional breach of contract (though negligent breach is covered). Patent/IP infringement (that's often a separate coverage). Bodily injury (that's GL). Guaranteed outcomes or performance warranties you made. Criminal/fraudulent acts.
The gap — what happens without it
Your SaaS platform has a bug that causes a client's e-commerce site to double-charge 3,000 customers over a weekend. The client loses $200K in refunds, chargebacks, and customer goodwill. They sue you for negligence in your code. Without E&O, you're paying defense attorneys ($50K+) and any settlement out of pocket — and your GL policy won't touch it because it's a 'professional services' claim.
What drives your premium
Annual revenue, type of services (custom dev vs. SaaS vs. consulting), client size, contract values, industry verticals served (healthcare and finance are higher risk), claims history
Endorsements to ask about
Technology services coverage (broader than standard E&O — covers software failures specifically). Rectification/mitigation costs (covers the cost of fixing the error, not just defending the claim). Network security wrongful act coverage.
Cyber Liability
Covers data breaches, ransomware, and digital threats
What it covers
First-party costs (breach notification, forensics, credit monitoring, data recovery, ransomware payments, business interruption from a cyber event) AND third-party claims (lawsuits from affected individuals, regulatory fines, PCI-DSS penalties). Covers the full lifecycle of a data breach.
Common misconception
Tech companies think their E&O policy covers cyber incidents. Some E&O policies have a cyber 'sub-limit' or basic coverage, but it's usually inadequate. A real data breach involves forensics ($50K+), notification costs ($2-5 per record), credit monitoring, legal defense, and regulatory response — that easily exceeds a $100K sub-limit.
What it does NOT cover
Unencrypted devices/data (some policies). Known vulnerabilities you failed to patch. War/nation-state attacks (though this exclusion is narrowing). Contractual penalties beyond what law requires. Prior/pending claims at policy inception.
The gap — what happens without it
A developer's laptop is stolen from a coffee shop. It contains an unencrypted database export with 15,000 customer records — names, emails, and partial payment info. You now owe: forensic investigation ($40K), legal counsel ($25K), notification letters to 15,000 people ($30K), credit monitoring ($75K), regulatory defense ($50K), and potential fines. Total exposure: $220K+ for a stolen laptop. Without cyber coverage, this comes from your operating budget.
What drives your premium
Number of records stored, type of data (PII, PHI, payment data), revenue, security posture (MFA, encryption, EDR), industry, employee count, prior incidents
Endorsements to ask about
Social engineering/funds transfer fraud coverage. System failure coverage (covers outages not caused by a security breach). Contingent business interruption (covers you when a vendor's breach affects your operations). Regulatory defense and penalties.
Important Coverage
General Liability
Covers third-party bodily injury and property damage claims
What it covers
Third-party bodily injury at your office, property damage, personal/advertising injury (copyright infringement in marketing materials, defamation). For tech companies, the advertising injury coverage is often more relevant than bodily injury.
Common misconception
Tech founders think they don't need GL because they work remotely and don't have customers visiting. But GL also covers advertising injury — if you accidentally use a competitor's copyrighted image in your marketing, or your ad copy is deemed defamatory, that's a GL claim. Also, if you ever have a client visit your office and they trip on a cable, that's GL.
What it does NOT cover
Professional services errors (that's E&O). Cyber incidents (that's cyber). Employment disputes (that's EPLI). Your own employees' injuries (that's WC). Intentional IP infringement. Contractual liability.
The gap — what happens without it
A client visits your office for a product demo. They trip over an exposed ethernet cable in the hallway — broken wrist, $18K in medical bills. Or: your marketing team uses a stock photo without proper licensing, and the photographer sues for $25K in copyright damages. Both are GL claims. Without it, you're paying out of pocket for incidents that seem trivial but add up fast.
What drives your premium
Revenue, office square footage, number of employees, client-facing activities, events/conferences attended, claims history
Endorsements to ask about
Hired & non-owned auto (employees driving to client meetings). Employee benefits liability (covers errors in benefits administration). Broadened personal/advertising injury.
Employment Practices Liability (EPLI)
Covers wrongful termination, discrimination, and harassment claims
What it covers
Claims from employees alleging wrongful termination, discrimination (age, race, gender, disability), sexual harassment, retaliation, failure to promote, and wage/hour violations. Covers defense costs, settlements, and judgments.
Common misconception
Small tech companies think EPLI is only for large corporations with HR departments. The reality: companies with 15-100 employees are the MOST vulnerable because they're large enough to have employment disputes but too small to have robust HR processes, documentation, and legal counsel preventing issues.
What it does NOT cover
Criminal acts. WARN Act violations (mass layoff notification). ERISA/benefits violations (that's fiduciary liability). Workers' comp claims. Wage/hour class actions (some policies exclude or sub-limit). Intentional violation of law.
The gap — what happens without it
You fire an underperforming engineer who happens to be over 50. He files an age discrimination complaint with the EEOC. Even if you had legitimate performance documentation, defending an EEOC charge costs $40-80K in legal fees. If it goes to court and you lose, damages can be $200K+. Without EPLI, every dollar comes from company revenue.
What drives your premium
Number of employees, industry, state (California is most expensive), turnover rate, prior claims/EEOC charges, HR policies in place, employee handbook existence
Endorsements to ask about
Third-party coverage (covers discrimination claims from clients/vendors, not just employees). Wage & hour defense cost coverage. Workplace violence coverage. Include coverage for remote workers in multiple states.
Directors & Officers (D&O)
Covers personal liability of company leadership
What it covers
Personal liability protection for founders, board members, and officers. Covers allegations of mismanagement, breach of fiduciary duty, misrepresentation to investors, wrongful acts in corporate governance. Pays defense costs and settlements from personal assets protection.
Common misconception
Founders think D&O is only for public companies. Any company with investors, a board, or multiple stakeholders faces D&O exposure. A disgruntled co-founder, an investor alleging misrepresentation in a pitch deck, or an employee claiming the board failed to prevent discrimination — these are all D&O claims that happen to startups.
What it does NOT cover
Fraud and intentional criminal acts (after final adjudication). Bodily injury/property damage (that's GL). Professional services errors (that's E&O). Prior/pending litigation. Insured vs. insured claims (some policies).
The gap — what happens without it
You raise a Series A based on revenue projections. Six months later, a key client churns and revenue drops 40%. An investor sues you personally, alleging you misrepresented the pipeline in your pitch deck. Defense costs alone: $150K. Without D&O, that comes from your personal bank account — not the company's. Your house, your savings, your kids' college fund are all exposed.
What drives your premium
Company stage (pre-revenue is higher risk), amount of funding raised, number of investors, industry, revenue, prior claims, board composition
Endorsements to ask about
Entity coverage (protects the company itself, not just individuals). Employment practices liability (can be bundled). Fiduciary liability. Broad definition of 'claim' including regulatory investigations.
Situational Coverage
Hired & Non-Owned Auto
Covers liability when employees use personal or rented vehicles for work
What it covers
Liability coverage when employees drive personal vehicles or rental cars for business purposes — client meetings, conferences, airport runs, lunch with prospects. Covers the company's liability if an employee causes an accident while on company business.
Common misconception
Tech companies think they have zero auto exposure because they don't own vehicles. But every time an employee drives to a client meeting, picks up lunch for a team meeting, or rents a car for a conference, your company has vicarious liability. The employee's personal auto policy covers them — but the company can still be sued.
What it does NOT cover
Physical damage to the employee's own vehicle (that's their personal policy). Vehicles owned by the company (that's commercial auto). Regular commuting. Personal errands during work hours.
The gap — what happens without it
Your sales rep drives their personal car to a client pitch meeting. They run a red light and T-bone another car — $120K in injuries. The injured party sues both the driver AND your company (respondeat superior — the employee was acting within the scope of employment). Without hired & non-owned auto, your company has no coverage for this claim. GL excludes auto liability.
What drives your premium
Number of employees, frequency of business driving, whether employees are reimbursed for mileage (indicates regular business driving), geographic spread of operations
Endorsements to ask about
This is typically added as an endorsement to your GL or BOP policy — not a standalone policy. Ask for it to be included with your GL renewal. Ensure it covers rental cars for business travel.
Not sure what you need?
Text us your trade and state — we'll tell you exactly what coverages apply to your business and shop the market for the best rate.