What Insurance Covers Software Errors and Coding Mistakes?

Technology errors and omissions insurance is a line to examine when a software customer alleges that a bug or coding mistake in a covered service caused financial harm. Professional liability more broadly addresses claims arising from professional services; Texas Department of Insurance guidance describes E&O as covering claims for damages from such services. The actual policy must define technology services or products broadly enough to include the work at issue.

A client’s claim for lost revenue is different from the developer’s internal cost to debug, rewrite, or improve its own code. Policies may exclude the cost to repair or replace defective work, contractual performance guarantees, or known defects. If a coding error caused unauthorized access or data exposure, cyber liability may address some incident response or privacy claims, while technology E&O may address a customer’s service claim.

Check scheduled software, development and hosting activities; treatment of re-performance costs and service credits; cyber and privacy coordination; subcontractor work; known-error exclusions; retroactive date; and whether defense costs erode limits. Ask the insurer to review representative customer contracts and the specific functions your product performs.