Question 1

What is a common misconception about Professional Liability (E&O) for Technology Companies?

Accepted Answer

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.

Question 2

What happens if technology companies don't have Professional Liability (E&O)?

Accepted Answer

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.

Question 3

What is a common misconception about Cyber Liability for Technology Companies?

Accepted Answer

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.

Question 4

What happens if technology companies don't have Cyber Liability?

Accepted Answer

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.

Question 5

What is a common misconception about General Liability for Technology Companies?

Accepted Answer

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.

Question 6

What happens if technology companies don't have General Liability?

Accepted Answer

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.

Question 7

What is a common misconception about Directors & Officers (D&O) for Technology Companies?

Accepted Answer

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.

Question 8

What happens if technology companies don't have Directors & Officers (D&O)?

Accepted Answer

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.

Question 9

What is a common misconception about Employment Practices Liability (EPLI) for Technology Companies?

Accepted Answer

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.

Question 10

What happens if technology companies don't have Employment Practices Liability (EPLI)?

Accepted Answer

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.

Question 11

What is a common misconception about Hired & Non-Owned Auto for Technology Companies?

Accepted Answer

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.

Question 12

What happens if technology companies don't have Hired & Non-Owned Auto?

Accepted Answer

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.

Technology Companies Insurance Coverage Guide | RISKX