Technology E&O vs Cyber Insurance: Tech Companies Need Both

🐛 Software Errors & Bugs

• Algorithm errors causing financial losses
• Database corruption leading to data loss
• Integration failures breaking client systems
• Performance issues causing business disruption
• Security vulnerabilities in your code (not exploited)
• Calculation errors in financial software

⏰ Failure to Deliver

• Missing project deadlines costing client revenue
• Software not meeting specified requirements
• Incomplete functionality at launch
• Poor performance not meeting SLA requirements
• Failed system migrations
• Inadequate testing leading to client problems

💡 Intellectual Property Issues

• Accidental use of copyrighted code
• Patent infringement claims
• Trade secret violations
• Licensing agreement breaches
• Open source license violations
• Confidentiality agreement violations

👹 Active Cyber Attacks

• Ransomware encrypting your systems
• Hackers stealing source code or client data
• DDoS attacks taking down your services
• Business email compromise and fraud
• Social engineering attacks on employees
• Supply chain attacks through vendors

💸 Business Interruption

• Lost revenue from system downtime
• Extra expenses to restore operations
• Customer notification and credit monitoring
• Crisis management and public relations
• Forensic investigation costs
• System restoration and data recovery

⚖️ Regulatory Response

• GDPR, CCPA, and other privacy law fines
• SEC cybersecurity disclosure requirements
• State data breach notification compliance
• Industry-specific regulatory penalties
• Legal defense against regulatory actions
• Compliance consulting and remediation

SaaS Platform: $2.3M Tech E&O Claim

Scenario: Authentication bug in software update allows some users to access other customers' data
Not a cyber attack: Internal software error, not criminal activity
Tech E&O covers: $850K in client revenue losses, $680K legal defense, $475K business interruption costs to affected customers, $295K regulatory fines
Cyber insurance: Wouldn't cover—no external attack or criminal activity

Mobile App Developer: $1.8M Cyber Claim

Scenario: Hackers exploit API vulnerability to steal 50,000 user profiles including payment data
Criminal cyberattack: External threat actors exploiting security weakness
Cyber insurance covers: $425K forensic investigation, $380K customer notification, $520K credit monitoring, $295K legal defense, $180K regulatory fines
Tech E&O: Might contribute if API was negligently designed, but cyber is primary

Cloud Services Provider: $950K Tech E&O Claim

Scenario: Database migration script error permanently deletes customer data, no backups recoverable
Internal operational error: Poor change management and backup procedures
Tech E&O covers: $425K to recreate lost client data, $285K business interruption for affected clients, $140K reputation management, $100K legal defense
Cyber insurance: Wouldn't cover—internal mistake, not criminal attack

Fintech Startup: $3.1M Combined Claim

Scenario: Poorly secured admin panel discovered by hackers who access customer financial data
Overlapping coverage: Both negligent security design AND criminal exploitation
Tech E&O contributes: $675K for negligent security design and inadequate testing
Cyber insurance covers: $1.2M incident response, $485K regulatory fines, $395K customer damages, $345K business interruption
Coordination required: Carriers work together on defense strategy

🚀 Startup ($1-5M Revenue)

🏢 Growing Company ($5-25M Revenue)

🏭 Enterprise ($25M+ Revenue)

💳 Fintech & Payment Processing

Higher cyber limits essential: $10M+ due to regulatory scrutiny
Tech E&O critical: Financial algorithm errors extremely costly
Key considerations: PCI DSS compliance, banking regulations, real-time processing risks
Package benefit: Coordinated coverage for security failures vs. design flaws

🏥 HealthTech & Medical Software

Both policies essential: HIPAA requires both security and reliability
High liability exposure: Patient safety implications of software errors
Key considerations: FDA software regulations, medical device connectivity
Package benefit: Coordinated response for breaches involving medical data

🚗 Automotive & IoT Technology

Physical safety implications: Software errors can cause accidents
Connected device risks: IoT devices vulnerable to attacks
Key considerations: Product liability overlap, real-world consequences
Package benefit: Coverage for both security vulnerabilities and design flaws

☁️ Cloud & Infrastructure Services

Business interruption focus: Client dependencies create massive exposure
Data custody responsibility: Storing client data increases cyber risk
Key considerations: Service level agreements, data sovereignty
Package benefit: Coordinated coverage for outages (internal) vs. attacks (external)

🎯 Highlight Your Strengths

Development practices: Agile methodologies, code reviews, testing protocols
Security program: DevSecOps integration, vulnerability scanning, penetration testing
Quality assurance: Automated testing, staging environments, gradual rollouts
Documentation: Comprehensive requirements gathering, change management
Team experience: Senior developer tenure, relevant certifications

⚠️ Address Risk Factors Honestly

Rapid development cycles: Explain quality controls for fast deployment
Open source dependencies: Describe vulnerability monitoring and updates
Remote development teams: Detail security controls and access management
Client data access: Explain data handling and access control procedures
Third-party integrations: Describe security evaluation and monitoring

📊 Present Coordinated Risk Profile

Consistent technology descriptions: Same architecture details on both applications
Unified security posture: Present comprehensive security program view
Coordinated limits: Proportional coverage amounts based on actual exposure
Package approach: Request coordinated coverage from same carrier group

💸 Business Email Compromise

Wire transfer fraud targeting tech companies—make sure cyber policy includes social engineering coverage

🔗 Supply Chain Attacks

Attacks through third-party vendors—ensure cyber policy covers dependent business interruption

📱 Mobile and IoT Devices

Connected devices create new attack vectors—verify coverage extends beyond traditional IT systems

☁️ Cloud Service Failures

When AWS/Azure goes down—make sure dependent business interruption covers third-party service failures

🌍 International Operations

GDPR fines can exceed $20M—ensure adequate limits for international regulatory exposure