Liability insurance for Technology & SaaS

• Are IT consulting businesses required to carry insurance?

  Not by any statute aimed at IT consulting. The legal mandates that exist are generic — workers' compensation and related coverage once you have employees, commercial auto for business vehicles. Everything else is required by contract: client MSAs and vendor-onboarding rules that demand E&O, cyber, and general liability before you start billable work.

• Cyber insurance vs tech E&O — what is the difference?

  Different failures, different plaintiffs. Tech E&O responds when your technology work fails a client — missed specs, software errors, a project that never ships. Cyber insurance responds when data or systems are compromised, paying breach response and privacy liability. Most technology businesses need both, increasingly bought as one blended policy from a single carrier.

• Do consultants need E&O insurance?

  Usually yes — not by law, but because the two forces that matter point the same way: client contracts increasingly require E&O before you can sign, and general liability explicitly won't cover what consultants actually get sued over — advice and work product that costs a client money. If your recommendations drive client decisions, E&O is the policy that responds.

• What does tech E&O insurance cover?

  Tech E&O covers third-party claims that your technology product or service failed someone who paid for it: negligence, failure to perform, software errors that cost a client money, and on many forms copyright and defamation claims. It does not cover bodily injury, property damage, or your own breach-response costs unless cyber coverage is attached.

• What insurance do startups need to close customer contracts?

  Usually tech E&O and cyber, plus general liability when a lease or vendor agreement demands it — but the authoritative answer is in the contract itself. Enterprise customers in B2B, SaaS, and regulated industries make E&O and cyber a condition of signature, and the certificate of insurance is effectively a closing document.

• What type of business insurance do I need for my consulting business?

  Professional liability (E&O) is the anchor — it answers the claims consulting actually generates. General liability gets added early because client offices and vendor-onboarding portals demand it, cyber joins once client data touches your systems, and workers' comp becomes statutory with your first hire. Let your client contracts, not a product menu, set the list.

• Does product liability insurance cover software?

  Almost never, and the reason is structural: product liability responds to bodily injury and damage to tangible property, while a software failure typically causes financial loss and corrupted data — which general liability policies treat as neither. Software failures are a tech E&O question. The exception is software embedded in physical products that hurt people.

Coverage mechanics for Technology & SaaS

Policy mechanics, exclusions, certificates, and claims questions live on our sister publication: Technology & SaaS on isthiscovered.org.