Technology errors and omissions (tech E&O)
Liability insurance for software vendors, integrators and IT providers covering losses their errors, failures or delays cause their clients, often combined with the cyber policy.
Technology errors and omissions insurance covers claims by a digital company's clients alleging a fault in the performance of its service: defective software, a failed integration project, an outage of a hosted service, a configuration error, a late delivery, wrong technical advice. It differs from the cyber policy, which covers security incidents suffered by the insured or caused to third parties by a security failure, although the two are often sold together because a single incident can trigger both. Underwriting focuses on the nature of the services, the criticality of the clients, contract drafting and above all limitation of liability clauses, which cap contractual exposure but do not always hold before a court, notably in cases of gross negligence. The risk has changed scale with the concentration of the digital economy: a vendor whose product is installed at thousands of companies can, through a single error, cause worldwide business interruption, and the question then becomes an accumulation problem, for its insurer as much as for its clients' insurers.
After the July 19, 2024 outage, Delta Air Lines, which had to cancel about 7,000 flights over five days, sued the security software vendor involved in October 2024, putting its losses at about 500 million dollars and challenging the limitation of liability in the contract.
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