ERRORS & OMISSIONS Insurance
Protection for bugs in your product that cause financial losses.
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2 MIN
Errors & Omissions Insurance with Ore
What Errors & Omissions does & doesn't cover
Recommendations based on stage and vertical
Which add-ons make sense for your startup
BECAUSE
The average settlement in an E&O lawsuit is more than $140,000 – not counting your legal costs.
WHEN
- Launching products or services
- Raising a round
WHY
- Tech startups tend to have higher E&O exposure than those in other industries, because innovation moves much faster than the laws that regulate it.
See recommended limits based on your stage and vertical
GET COVERAGE RECOMMENDATIONTHE PROTECTION
What Errors & Omissions Insurance Covers
Payment of legal fees
Payment of any settlement or judgment against your startup, should it be found liable.
Negligence
Someone at your startup fails to use reasonable care, which results in financial damage to a person or entity.
Breach of warranty
A promise is made to a client in a warranty and your company is unable to keep that promise.
Misrepresentation
A false statement or claim is made to entice another party into agreeing to the terms of a contract with your company.
Product failures
Financial loss due to bugs and outages that impact the client or customer.
Copyright of software code
Costs associated with harm caused by your product.
ADD ON
Ancillary financial services endorsement
Costs associated with harm caused by your product, including property damage or physical injury.
ADD ON
What it doesn’t cover
- Data breach claims: typically covered by Cyber insurance.
- Employee injury costs: typically covered by Workers’ Comp.
- Property damage: typically covered by a Business Property policy.
- Third-party bodily injury: typically covered by General Liability.
- D&O claims: typically covered by a Directors and Officers policy.
FROM THE ACTUARIES
Errors & Omissions Claims Examples
Missed projected return on investment
Incident
A real estate investment platform lists an opportunity to invest in a new development in Salt Lake City. They include a target return rate in their communications, and clearly state that the number is just a projection and not a guaranteed return. Still, they receive a demand letter from two investors alleging negligent investment advice and seeking a return of their investment.
Resolution
An endorsement for financial and investment activities on the E&O policy provides coverage for the client’s attorneys’ fees to investigate and respond to the demand letter. The client denies any liability and the investors ultimately decide not to pursue their claim.
Product bug resulting in investment losses
Incident
A series B fintech startup launches an investment platform that allows users to easily buy and sell stocks through a mobile app. Due to a bug that was not caught on time, some users are unable to make any transactions during a 7-hour period. The startup ends up being named as a defendant in several lawsuits by investors alleging they were wrongfully blocked from purchasing shares of certain highly volatile stocks.
Resolution
The E&O policy provides coverage for the cost of attorneys’ fees to defend the startup, up to the policy limits.
Case Study
Incident
A real estate investment platform lists an opportunity to invest in a new development in Salt Lake City. They include a target return rate in their communications, and clearly state that the number is just a projection and not a guaranteed return. Still, they receive a demand letter from two investors alleging negligent investment advice and seeking a return of their investment.
Resolution
An endorsement for financial and investment activities on the E&O policy provides coverage for the client’s attorneys’ fees to investigate and respond to the demand letter. The client denies any liability and the investors ultimately decide not to pursue their claim.
Incident
A series B fintech startup launches an investment platform that allows users to easily buy and sell stocks through a mobile app. Due to a bug that was not caught on time, some users are unable to make any transactions during a 7-hour period. The startup ends up being named as a defendant in several lawsuits by investors alleging they were wrongfully blocked from purchasing shares of certain highly volatile stocks.
Resolution
The E&O policy provides coverage for the cost of attorneys’ fees to defend the startup, up to the policy limits.
INSURANCE 101
What Should My Errors and Omissions Insurance Policy Cover?
We answer the top questions that startup leaders have about E&O insurance and tell you what to keep your eye out for in terms of exclusions.
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COMPREHENSIVE PROTECTION
Explore Insurance Coverages
General Liability Insurance
Foundational protection for the risks of running a startup.
Business Property Insurance
Protection from disaster and theft.
Directors & Officers Insurance
Protection for your founders, officers and board members.
Errors & Omissions Insurance
Protection for bugs in your product that cause financial losses.
Fiduciary Liability Insurance
Protection for mistakes with employee benefit plans.
Employment Practices Liability Insurance
Protection for allegations of wrongdoing in the workplace.
Cyber Insurance
Protection for the damages caused by data breaches.
Crime Insurance
Protection for employee theft and fraud.
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