Errors & Omissions Insurance Claims Examples
Let’s look at some common errors & omissions insurance policy claim examples to help in better understanding of different types of risks for tech companies.
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Cybercrimes:
Almost every technology company deals with huge amounts of data regularly. Most of the data is highly sensitive, including personal information. The more amount of data a company deals with, the more it is prone to cybercrimes. A data breach is one of the most common errors & omissions claim examples.
If a client’s sensitive data is breached or compromised, your business might face a lawsuit. It is usually alleged that it was the IT company’s duty to protect client data. The IT company should hence take responsibility to restore the data.
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Breach of contract:
When a company starts working with a new client, a detailed contract is very essential. It mentions the tasks to be done, the obligations involved, the deadlines etc. In case a company misses a deadline or is unable to fulfill any mentioned obligation, the client holds the right to sue the company on the grounds of breach of contract.
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Breach of warranty:
A breach of warranty occurs if a client claims your product or service hasn’t lived up to the standards as promised. According to the client, the service or product provided doesn’t match the expected warranty as promised.
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Negligence:
Negligence is when a company fails to take reasonable care, and the outcome negatively impacts the client. Such types of lawsuits are filed as a result of inattentiveness or poor oversight leading to financial and reputational losses. For example, if the software shared with the client wasn’t cleared of bugs, the client might file a lawsuit.
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Misinterpretation:
A misinterpretation claim can be filed if the client feels your company had misguided or presented false data to secure a contract. For example, after offering a particular quote for your service, there were some hidden charges which weren’t discussed or informed. The client can sue the company.
Conclusion
In today’s technology-driven world, cyberattacks and cybercrimes are closely tied, making the errors and omission insurance policy a definite buy for tech companies. Adequate E&O insurance coverage is a must for IT companies to safeguard their business from lawsuits arising from professional negligence or mistake.
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