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INSURANCE FOR WHEN SOFTWARE DOESN’T GO TO PLAN
What Is Software Errors & Omissions Insurance?
Software Errors & Omissions Insurance (Tech E&O) protects your business if a defect, outage, misconfiguration or failure in your software or service causes financial loss for a customer and they hold you responsible. It sits at the intersection of Professional Indemnity and technology liability, responding to claims that your code, product or technical services were faulty, late, unreliable or not as described.
Insure24 designs E&O solutions for SaaS providers, software product companies, development houses, managed service providers and independent software contractors, aligning your cover with real-world risks: production incidents, integration failures, failed migrations, performance issues and complex SLAs.
What Software Errors & Omissions Insurance Can Cover
A specialist insurance solution that recognises how software is built, deployed, supported and relied upon.
- Claims that bugs or defects in your software caused customers financial loss.
- Allegations that your system or platform failed to perform as specified.
- Outages, downtime and performance issues leading to compensation demands.
- Failed software implementations, migrations or upgrades (subject to wording).
- Misconfiguration, incorrect setup or poor technical advice around your product.
- Claims linked to missed deadlines or project delays causing financial impact.
- Legal defence costs when customers allege negligence or breach of contract.
- Certain claims relating to IP infringement or misuse of third-party code (wording dependent).
- Claims around incorrect data processing or reporting caused by software errors.
- Some contractual indemnities where you’ve agreed to take on defined risks.
- Associated investigation, expert and settlement costs, subject to policy terms.
- The work of your employees, contractors and approved subcontractors.
Typical Software Errors & Omissions Claim Scenarios
How software incidents can turn into E&O claims – and why insurers want the right cover in place.
Product & Platform Failures
- A SaaS platform outage stops customers trading or fulfilling orders.
- A bug in an update corrupts transaction data across multiple clients.
- A performance regression leads to timeouts at peak usage.
- An algorithmic change results in incorrect pricing or recommendations.
- New releases introduce defects not picked up in pre-production testing.
Implementation & Integration Issues
- A migration project leaves historic data incomplete or inconsistent.
- Integration with a third-party API fails in production environments.
- Incorrect configuration leads to reporting errors or failed workflows.
- Scope creep is poorly documented and expectations diverge.
- Disputes arise over who is responsible when multiple vendors are involved.
Contract & SLA Disputes
- Customers claim missed SLAs entitle them to compensation beyond service credits.
- A major client alleges lost revenue due to delays in delivery or go-live.
- Limitations of liability are challenged after a large incident.
- Differences between sales promises and formal specifications cause tension.
- Indemnity clauses are triggered following an issue affecting end users.
Data, IP & Regulatory Angle
- IP disputes where software allegedly infringes a patent or copyright.
- Incorrect handling of regulated data (e.g. financial, health) leads to investigations.
- System design is criticised after a cyber incident exposes vulnerabilities.
- Regulators or auditors question the reliability of reports generated by your system.
- Large customers use legal pressure to recover losses or renegotiate contracts.
Why Software Businesses Choose Insure24 for E&O
- Access to insurers specialising in software, SaaS and technology risk.
- Understanding of agile delivery, DevOps, CI/CD and modern release cycles.
- Experience with claims involving outages, defects and contractual disputes.
- Ability to align E&O, PI and Cyber into a coherent technology package.
- Support translating technical incidents into language insurers understand.
- Help reviewing key contract and SLA clauses from an insurance perspective.
- Options for startups, scale-ups and established vendors alike.
- Cover structures suitable for both companies and independent contractors.
- Regular reviews as your architecture, customer base and revenues change.
- A broker focused on specialist commercial and technology insurance.
How to Arrange Software Errors & Omissions Insurance
Understanding Your Exposure
- What your software does and how critical it is for customers.
- Who you sell to – SMEs, enterprise, regulated sectors, global customers.
- Typical contract sizes, pricing model and revenue profile.
- How SLAs, service credits and liability caps are structured.
- Your history of incidents, claims or major production issues.
Structuring the Right Programme
- Choosing appropriate E&O/PI limits based on realistic worst-case scenarios.
- Combining E&O with Cyber, PL, EL, property and business interruption.
- Factoring in investor, customer and board expectations.
- Considering worldwide exposure and regulatory environments.
- Reviewing your programme annually as the product and business evolve.
Software Errors & Omissions – Real-World Examples
Case Study: SaaS Outage During Peak Trading
Situation: A SaaS vendor experienced a prolonged outage during a key sales period for major retail customers.
Issue: Customers claimed significant lost revenue and sought compensation beyond contractual service credits.
Outcome: E&O cover (subject to policy terms) supported legal defence and settlement discussions, while the vendor strengthened capacity planning and incident response procedures.
Case Study: Implementation Bug in Custom Build
Situation: A development house implemented a custom system integration. A bug in the mapping logic led to misallocated orders.
Issue: The client sought to recover rework costs and alleged wider business losses.
Outcome: E&O insurance funded legal support and contributed to an agreed settlement. Clear documentation of scope and change requests helped contain the contractor’s exposure.
Case Study: Disputed SLA & Liability Caps
Situation: A large customer argued that contract wording allowed them to claim beyond agreed caps after a series of performance issues.
Issue: The vendor faced the risk of a claim far larger than anticipated when setting their limits.
Outcome: E&O defence cover helped contest the interpretation of the contract and ultimately reach a more manageable resolution, highlighting the importance of aligning contracts with insurance.
Case Study: Independent Contractor Configuration Error
Situation: A contractor made a configuration change that caused downtime on a critical platform.
Issue: The client attempted to recover costs from the contractor’s limited company.
Outcome: The contractor’s E&O / PI policy responded (subject to terms), providing legal support and helping settle the matter without personal ruin.
Best Practice to Reduce Software Errors & Omissions Risk
Insurance is one part of managing E&O risk. Strong engineering and commercial discipline make claims less likely and easier to defend.
Technical & Operational Controls
- Robust change control, code review and testing processes.
- Staged rollouts, canary releases and rollback plans for major changes.
- Monitoring, alerting and incident response runbooks.
- Clear documentation of architecture, dependencies and data flows.
- Post-incident reviews with action tracking and learning capture.
Contract & Expectation Management
- Aligning sales promises with technical and operational reality.
- Using written specifications, SoWs and acceptance criteria.
- Negotiating realistic SLAs, service credits and liability caps.
- Documenting assumptions, dependencies and responsibilities.
- Keeping copies of key communications that evidence what was agreed.
“Our SaaS product is mission-critical for customers. Having the right Errors & Omissions cover in place through Insure24 means we can sign bigger deals with more confidence and respond professionally when incidents happen.”
CEO, Software CompanyPROTECT YOUR CODE, YOUR CONTRACTS & YOUR CUSTOMERS
- The software and services your customers rely on every day.
- Your contractual promises, SLAs and indemnities.
- Your balance sheet and cash flow when incidents occur.
- Your ability to defend yourself if things go to legal escalation.
- Your reputation as a reliable vendor or contractor in the long term.
FREQUENTLY ASKED QUESTIONS
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What is Software Errors & Omissions (E&O) insurance?
Software Errors & Omissions insurance is a form of Professional Indemnity designed specifically for
technology businesses. It protects you when customers claim that a defect, failure, delay or mistake in
your software or technical services has caused them financial loss.
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Who needs Software E&O insurance?
Any business or contractor whose software or technical input could cause financial loss if it goes wrong
should consider E&O cover. This includes SaaS providers, product companies, development houses, system
integrators, managed service providers and independent software contractors.
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Is E&O the same as Professional Indemnity?
E&O is closely related to Professional Indemnity, but written specifically for technology exposure.
Many policies combine the two, covering both professional advice and the performance of your software
products or platforms. The exact scope depends on the policy wording.
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Does E&O cover bugs and outages?
E&O can respond to claims that bugs, defects or outages in your software caused financial loss, but it
does not guarantee perfection or cover every commercial risk. Cover depends on the policy wording, the
nature of the incident and the terms of your contracts and SLAs.
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Is Software E&O the same as Cyber insurance?
No. E&O focuses on financial loss arising from your errors, omissions or service failure. Cyber
insurance focuses on security incidents, data breaches and network events. Many software companies
benefit from both, and we will explain how the two policies complement each other.
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How much Software E&O cover do we need?
Suitable limits depend on your customer base, contract sizes, use cases and the potential impact of
failure. We look at worst-case scenarios, existing limitation of liability clauses and what larger
customers or investors expect, then recommend realistic options.
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Does E&O cover work we’ve already done and earlier software versions?
E&O and PI are usually written on a “claims-made” basis. Provided you maintain cover and your
retroactive date is set appropriately, earlier work and previous versions of your software can be
covered if a claim arises later.
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Can Software E&O cover overseas customers and contracts?
Many policies can cover worldwide work, but certain jurisdictions (such as the USA or Canada) may
require specific agreement. We will ask where your customers are located and structure cover accordingly.
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How do we prove our E&O cover to customers, partners or investors?
Insure24 provides confirmation of cover and policy schedules showing your E&O, PI, Cyber, PL and EL
limits. These documents can be used for onboarding forms, tenders, security questionnaires and investor
due diligence.
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What should we do if a customer hints at a potential claim?
Contact Insure24 as soon as you become aware of a serious complaint or potential claim. Early
notification is a requirement of most E&O and PI policies. We help you notify insurers correctly and
manage communications with the customer in a controlled way.