How much does Tech E&O Insurance cost?

Tech E&O Insurance

The cost of Technology Errors & Omissions (Tech E&O) Insurance will depend on several factors, such as:

The type of technology product or service is insured.

As an example, a low-hazard technology provider like a website developer is going to pay less for E&O insurance than say a Fintech company that is handling money transactions where the potential for loss is high.

The potential hazard level of claims that can arise from the product or service provided by the tech firm is going to be a prime determinant of cost.

The second biggest factor is going to be the size of the company.

A start-up just developing their product or service is of course going to pay a lot less than an established firm doing millions of dollars of revenue every year.

The third factor for Tech E&O Insurance cost is going to be the feature of the policy a company selects.

Here I’m talking about the limits of protection purchased and the retention or deductible level you choose.

Buy higher limits like $5,000,000 and you’ll pay more than if you buy just $1M – makes sense.

Now when it comes to the policy retention or deductible which is the amount the insured will pay out of pocket before insurance kicks in for a claim, the higher the retention the more credit you’ll get off the premium.

But there is a diminishing return with retentions and deductibles, meaning that too high of a deductible puts you at greater risk for too little payoff.

Here’s an example. Say a $5,000 retention gives you a 10% discount off the standard retention of $1,000 in a policy – and this is all hypothetical. And you say, well maybe I’ll take a $50,000 retention and get even a bigger discount.

Unfortunately that huge risk you’re willing to assume may not pay off, it may only give you a 25% credit off your premium.

The bottom line is that a skilled broker, like me can help you make sense of what retention levels you should be purchasing to balance premium credits with assumed risks.

Finally in the premium development is your claim history.

Two similar companies in the same industry with the same revenues should pay similar premiums for the same policy.

But if one company has had a couple of claims over the past five years their premiums will be higher than the other company having no claims in the same five-year period.

That only stands to reason, a company with no prior claims is a better risk from an underwriting perspective and should pay less than a firm with claims.

Have other questions I didn’t answer here, or want to find out what tech e&o would cost you and your company?

Why not reach out and connect?

I look forward to speaking with you soon.


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