Tech insurance: key insights for your consultancy or technology company.

This article was originally published January 7, 2025

Having a technology business can be exciting and rewarding. But working in this industry can be stressful if you don't have the right financial protection. From property damage to client lawsuits, there are many ways to find yourself facing unexpected expenses. But here’s the good news: A THREE tech insurance policy can cover the costs of incidents IT companies and consultants are most likely to encounter.

Let’s dive into the important topic of insurance for technology companies! We’ll answer the general question, “What is tech insurance?” We’ll also explain why you need it, how you get it, why you should work with a reliable business insurance provider, and more.

Tech company insurance protects a wide range of roles and titles.

“Technology company” and “technology professional” are terms we use as shorthand for a wide range of critical roles and titles in technology. You might use any of the following terms or others to refer to your company or the people who work for you:

• IT analyst

• Programmer

• Technical consultant

• IT trainer

• Software consultant

• Systems analyst

• Information systems consultant

• Database manager

• Software architect

• Software engineer

• Computer consultant

• Solution architect

• Technical advisor

• Custom software developer

In this article, we’re covering tech insurance that may be beneficial to any entity or person who provides technical advice or services related to computer systems, databases, and more.

Why is tech insurance important for startups?

Why do tech startups need business insurance? That’s an important question.

While technology insurance is vital for every tech company, it is especially critical for startups. For founders, securing the right coverage is a fundamental step in building credibility. It signals professionalism and operational readiness to investors, potential clients, and other stakeholders, showing them your business is built on a solid foundation. This allows you to confidently pitch for funding, pursue strategic partnerships, and launch your products or services, knowing you are protected from risks so you can focus on growth.

Additionally, startups require technology business insurance that keeps up with innovation. Core policies like Technology Errors & Omissions (E&O) and Cyber Liability are designed to address the realities of a modern, tech-driven business. This tailored coverage provides meaningful protection against the unique risks of launching and scaling a digital product, such as software bugs that cause a client financial loss, unexpected service outages, or data handling errors. It is protection built for your business model.

Is tech insurance different for consultants vs. tech companies?

The short answer is no—the fundamental technology insurance needs for a consultant are very similar to those of a tech company. Whether you’re building a software product or providing expert guidance, the core risks often revolve around professional services and data security.

Technology insurance policies like Professional Liability and Cyber Liability provide real protection for the risks central to client-centered work. This coverage is designed to shield you from the financial fallout of alleged advice errors, client system failures, or missteps in handling a data breach, reflecting the specific work you do without adding irrelevant or bulky layers.

For an independent consultant or consultancy owner, carrying this insurance also plays a crucial role in building a successful practice. It provides credibility that opens doors, as many discerning clients require their consulting partners to be fully insured as a standard contract term. This backing can give you the confidence to take on large, high-pressure engagements. Knowing you have a reliable safety net if a project encounters problems allows you to focus on delivering exceptional results for your clients instead of worrying about potential liability.

Understanding Professional Liability insurance.

One type of tech business insurance that’s particularly important is Professional Liability insurance. As noted above, you might hear people call it “tech Errors & Omissions” or “tech E&O insurance,” but it protects your business in situations where you made a mistake or provided incorrect advice that caused their business financial harm.

For example, let’s say you advise a client to buy several expensive computer servers as part of a large IT project. They make the purchase and the manufacturer delivers the units. But the client then discovers you provided an incorrect model number, and they can’t use the devices. They’ll have to return them and pay the shipping costs and other fees. They also missed out on a deal from another company on the correct devices, and now they’ll pay significantly more for their servers.

The client sues your business for their losses—an amount close to $75,000—and the court agrees that you’re liable. Thankfully, your Professional Liability insurance can cover the cost plus your legal defense fees.  Without that coverage, you’d be required to pay the amount from your savings or revenues.

So, you can see why tech E&O insurance is essential.

What does tech insurance typically include?

In the tech sector, E&O insurance protects companies from potentially costly lawsuits, which is really important. But it’s not the only type of technology business insurance you need. Tech businesses face other risks, which can be addressed by different components of a THREE policy:

Employee injuries.

Insurance for technology companies includes Workers’ Compensation coverage for work-related injuries or illnesses, such as developing carpal tunnel syndrome or being injured in an auto accident on the way to a client location. It can pay medical bills, rehabilitation costs, and some of the person’s lost wages while they recover. Workers' Compensation protects employees and owners. It's also required in many states for businesses with employees.

Theft of business property.

Computers, servers, and other technology equipment can be expensive. If someone steals company property and you have this type of coverage, you can expect payment.

Property damage.

Property insurance can cover situations like a pipe bursting, flooding your office, and damaging equipment and furniture.

Employee theft.

If one of your employees steals from a client, the business liability coverage in a comprehensive insurance policy from THREE may pay related costs.

Commercial auto damage and liability.

This insurance for technology companies covers business-owned or leased vehicles. It can pay court-awarded damages or settlements if someone driving your vehicle is at fault in an accident and the other party sues. It can also pay to repair damage to your vehicles from accidents, vandalism, or other covered causes.

Cyberattacks.

As a tech company or consultant, you are likely to receive sensitive information from clients. If someone hacks into your computer network, steals data, and uses it to commit fraud (or is likely to), the Cyber coverage in a THREE technology services insurance policy can pay specified costs related to the theft.

The benefits of an all-in-one tech company insurance policy from THREE.

Unlike companies that offer several policies, each designed for a specific risk, THREE provides the protection most tech companies need in a single, comprehensive insurance policy. That benefits your business in several ways.

For example, researching and buying technology insurance from us takes less time and effort. Our all-in-one policy is also easier to manage, use, and update as needed so you can stay focused on your work.

With THREE in your corner, you can focus on doing your best work without worrying about suddenly having to deal with a large expense from a legal issue or other incident.

For operations and risk managers in particular, this all-in-one approach to tech company insurance provides essential safeguards for managing complex, cross-functional risk. A single, cohesive policy that includes Cyber, Tech E&O, and other essential coverages can address interconnected exposures that touch your engineering, product, and legal teams. This unified framework gives your teams the confidence to support company growth and innovation, providing them with a clear safety net to build and experiment without exposing the business to liabilities.

This consolidated coverage also functions as a professional risk strategy that builds trust within the organization and with external stakeholders. Presenting a comprehensive insurance framework demonstrates foresight and stability to executives, board members, partners, and regulators alike. It is coverage designed to evolve with your business, scaling alongside your product offerings and services to protect the company from today’s known risks while anticipating tomorrow’s challenges.

An insurance provider technology companies trust for Professional Liability and other coverages.

Tech companies and consultants tend to be analytical by nature, so it’s no surprise that they typically take a systematic approach to evaluating their business insurance options. What they find is that it’s hard to beat THREE’s winning combination:

• Convenient all-in-one policy

• Highly regarded provider

• Better risk protection

• Outstanding customer support

• Backing of a trusted, established company

If you’re researching comprehensive coverage options for your technology company or consultancy and have questions about how we can help, don’t hesitate to reach out. We’re happy to answer them. Contact us at 1-800-507-4495, Mon.–Fri. 8am–9pm ET.