Technology is integral to how most businesses operate, but it also creates exposure when systems fail or services fall short. If a client experiences financial loss because of an error in your technology, your company could be held responsible. Technology Errors and Omissions (Tech E&O) Insurance protects against those losses.

Choosing the right coverage limit is about understanding how much protection your business needs to manage that risk. The right amount ensures your company can withstand a claim, meet client obligations, and maintain continuity through unexpected challenges.

How Much Tech E&O Coverage You Need

Setting your coverage limit starts with understanding the scale of your operations and the potential financial impact of a failure. These factors help determine the level of protection your company should carry.

Client and Contractual Obligations

Start with your largest contracts. Many enterprise and regulated clients require specific coverage minimums for E&O and Cyber liability. These requirements often establish your baseline and may increase as your company signs larger or more complex agreements.

Dependency and Business Impact

Evaluate how critical your product or service is to your clients. If an outage, bug, or missed deadline could disrupt their revenue, operations, or compliance, a higher limit may be necessary to account for that potential loss.

Industry and Regulatory Environment

Companies operating in regulated or data-sensitive sectors, such as financial services, healthcare, or AI, face higher potential liability due to compliance obligations and data protection requirements. Coverage limits should reflect the magnitude of those risks.

Revenue and Growth

As your business scales, so does your potential exposure. New contracts, higher transaction volumes, and broader client bases increase the financial impact of potential claims. Reassess your coverage annually to ensure it aligns with growth.

Combined Coverage Structures

If you have both Tech E&O and Cyber coverage, determine whether they share limits. A shared structure can limit available protection across multiple claim types, while separate limits provide clearer boundaries for each category of risk.

Geographic and Jurisdictional Reach

Operating across states or internationally adds complexity to your exposure. Different jurisdictions bring varied legal and regulatory costs. Broader reach often requires higher limits to ensure full coverage across potential claim scenarios.

Understanding Tech E&O Coverage Limits

Your Tech E&O policy includes two main limits: a per-claim limit and an aggregate limit.

• The per-claim limit is the maximum amount your insurer will pay for any single covered incident.
• The aggregate limit is the total amount available for all claims within the policy period.

Both limits include defense costs, settlements, and judgments. Because legal expenses count against your total coverage, it’s important to make sure your limits are high enough to cover a full defense and potential damages.

If you combine Tech E&O with Cyber insurance, check whether those coverages share a limit or have separate aggregates. Shared limits can reduce available funds if more than one type of claim occurs in a policy year.

Note that higher limits will generally result in paying more for your Tech E&O coverage.

How to Determine How Much Tech E&O Coverage You Need

The best way to identify the right coverage level is to take a structured approach:

1. Review your largest client contracts for indemnification clauses and insurance requirements.
2. Estimate the financial impact of a major service disruption or data-related incident.
3. Consider your business continuity, including reputational and operational fallout.
4. Consult with your broker to benchmark limits against industry peers and contract trends.

These steps help ensure that your policy limits reflect actual exposure, not assumptions. A Vouch advisor who knows your industry can help you set the right limits.

When to Increase Your Limits

Reevaluate your coverage if any of the following apply:

• You’ve signed larger or more regulated clients
• You’ve expanded into new markets or product categories
• Your company now handles more sensitive or regulated data
• You’ve raised new funding or entered partnerships with higher compliance standards

Your policy should evolve as your company’s responsibilities and visibility increase.

Determining how much Tech E&O coverage you need is about aligning your protection with the real risks your company faces. Review your policy regularly, especially as your business scales or enters new markets.

With the right coverage in place, you can operate with confidence knowing your company is prepared for the challenges that come with building and maintaining technology others depend on.

Frequently Asked Questions

How do I determine the right coverage limit?

Start by reviewing client contracts and estimating the financial impact of a worst-case service failure. Your broker can help align your limits with your actual exposure.

Do legal defense costs reduce my available limit?

Yes. Attorney fees, settlements, and judgments all draw from your policy limit, which is why limits should be high enough to cover both defense and damages.

How often should I review my coverage limits?

Annually, or whenever your company signs larger contracts, expands into new industries, or adds significant data or operational risk.

What if my clients require higher limits than I currently have?

You can increase your limits mid-term or at renewal. Work with your broker to adjust coverage in line with client expectations and business goals.

Is there such a thing as too much coverage?

It’s safer to carry slightly more than to discover a shortfall during a claim, but you don’t want to be overpaying so that you can’t afford the coverage. A Vouch advisor can help ensure you have the right amount of coverage at a price that fits.

Vouch Specialty Insurance Services, LLC (CA License #6004944) is a licensed insurance producer in states where it conducts business. A complete list of state licenses is available at vouch.us/legal/licenses. Insurance products are underwritten by various insurance carriers, not by Vouch. This material is for informational purposes only and does not create a binding contract or alter policy terms. Coverage availability, terms, and conditions vary by state and are subject to underwriting review and approval.