$1M Professional Liability (E&O) Insurance for Technology and Media Firms

For developers, IT firms, agencies and creative businesses: a $1M requirement means your policy pays up to $1M per claim for errors in your work, and contracts may also ask for a $2M yearly total.

What does a $1M requirement mean for technology and media firms?

Professional Liability (E&O, short for Errors and Omissions) covers claims that a mistake in your work caused a client a financial loss. A typical clause reads:

• Per claim: the most the policy pays for any one claim. Here, $1M.
• Aggregate: the most the policy pays for all claims in one policy year. Here, $2M. A $1M/$1M policy falls short of this clause. A $1M/$2M policy may meet the limits in this sample clause, but other wording in the clause or policy could still matter.
• Claims-made: Professional Liability almost always covers claims made and reported while the policy is active, for work done on or after the retroactive date (the earliest date of work the policy covers).
• "Network security and privacy": this is Cyber coverage, which pays for data breaches and network attacks. A plain E&O policy may not meet a clause that names it.

For more on how limits are written, see Professional Liability limits explained.

Who asks technology and media firms for $1M?

You will often see $1M from:

• Mid-sized companies hiring a developer.
• Businesses outsourcing IT to a managed service provider.
• SaaS buyers adding a vendor that touches their data.
• Brands hiring SEO or ad agencies.
• Agencies subcontracting creative work.
• Some publishers and production companies buying content from outside creators, who may ask for media liability.

Larger projects, or clients who want a higher yearly total, may ask for $2M instead (see $2M Professional Liability for technology and media firms). A $1M/$2M policy keeps $1M per claim and raises only the yearly total.

How is $1M built?

At $1M, you usually have one primary policy (the policy that pays first). Extra layers stacked above it (excess policies) are less common at this size. Software, IT and managed-service firms usually buy Technology E&O, a form built for digital services. It is often packaged with Cyber (coverage for data breaches and network attacks).

Agencies, designers and consultants often buy a general Professional Liability form, or an agency form that adds media liability. Publishers and content creators usually need it too. It covers claims over copyright, trademarks, defamation (false statements that harm someone's reputation) or privacy in content you create.

Two limits to know. A commercial umbrella (extra liability coverage above your other policies) almost never covers Professional Liability (see Does a commercial umbrella cover Professional Liability?). And clients usually cannot be added as an additional insured (a named extra party on your policy) on this coverage. A few policies may allow it in narrow cases. Your policy wording controls.

What will underwriters ask for?

An underwriter is the person at the insurer who decides whether to offer coverage. At $1M, they usually ask for:

• Each service you offer, with a rough share of revenue.
• Revenue, largest clients and typical project size.
• The industries you serve, such as healthcare, finance or government.
• Whether you have access to client systems, networks or personal data.
• Security habits, such as multi-factor login (a second step to sign in), and how you clear rights to images and music.
• Prior claims, possible claims, and your current policy and retroactive date.

What affects the cost?

• Type of work. Work with more risk of client financial loss or data exposure, such as managed IT or software, may cost more than lower-risk creative work.
• Revenue and client size.
• Cyber and media parts. Adding Cyber or media liability, or handling sensitive data, adds cost.
• Claims history. Prior claims can raise the price or narrow options.
• Aggregate and retention. A $1M/$2M policy usually costs more than $1M/$1M. A higher retention (the amount you pay on each claim before the policy pays, like a deductible) usually lowers the price. Defense costs paid outside the limit often add cost.

Frequently asked questions

Do I need $1M Professional Liability as a software developer or agency?

Your contract decides whether you need it. Some developer, IT and agency contracts ask for it.

My contract asks for "network security and privacy" coverage. Does my E&O policy include it?

Not always. Cyber is often a separate section with its own limit. Send Morrow the policy and the clause, and Morrow can review them together.

Is $1M/$1M enough if my contract says $1M/$2M?

Usually not. A $1M/$1M policy has a lower yearly total than the $2M the contract asks for. Morrow can request quotes for a $1M/$2M policy and ask to keep your retroactive date and prior acts coverage (coverage for work you did before the new policy starts) where the market allows. Keep your current policy in force until any new policy is in place, so that you do not have a gap in coverage. Report anything that could become a claim to your current insurer before that policy ends.

This article is general information, not legal advice or a coverage determination. Coverage depends on the actual policy wording, carrier underwriting and your contract terms.