Cyber liability and technology errors and omissions are often packaged together, but they address different starting points. A growing technology company should understand both because a single incident can trigger allegations in each category.

Cyber begins with data and systems

Cyber coverage commonly addresses privacy events, network-security failures, ransomware response, forensic investigation, notification, restoration and certain business interruption. Exact terms and sublimits vary widely.

The underwriting conversation typically focuses on access controls, multifactor authentication, backups, endpoint security, incident response, vendors and sensitive-data volume.

Technology E&O begins with the service

Technology E&O generally responds when a customer alleges that the insured’s technology product or professional service failed and caused financial harm. Examples include implementation errors, defective software, missed specifications or service outages.

A cyber policy without technology E&O may not address a customer’s claim that the product simply did not perform—even when no data breach occurred.

One event can involve both

Suppose a software vulnerability exposes customer data and forces the customer offline. The insured may face its own forensic and notification costs, a privacy claim, and a customer demand for lost revenue under the services contract.

The combined wording, limits, retentions, exclusions and allocation provisions determine how the policies respond. Buyers should test realistic scenarios rather than relying on labels.

Review contracts with the policies

Customer agreements define warranties, indemnities, liability caps, security promises and service levels. Compare those promises with policy exclusions for contractual liability, performance guarantees, intellectual property and prior-known circumstances.

  • Map first-party response costs and third-party claims.
  • Confirm dependent business-interruption language.
  • Review retroactive dates when changing carriers.
  • Give underwriters an accurate description of products and services.

Sources and further reading

This article provides general risk-management and insurance information, not legal advice. Coverage depends on the specific policy language, facts and applicable law.