Errors and Omissions Claims Examples

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.

1. 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.

2. 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.

3. 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.

4. 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.

5. 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.