Whether you’re coding solutions as a tech start-up or crafting strategies as a seasoned consult, it’s important to have adequate insurance protection in place. But when it comes to choosing the right coverage, tech E&O or MPL, which one is the best fit for your business?
While both tech E&O and MPL provide professional liability insurance coverage, they are intended to protect very different types of professionals. Because a software glitch that disrupts a client’s operations is a far cry from a consultant’s advice leading to financial loss.
In this post, we’ll walk you through the key differences between the two types of policues, so you that can determine which coverage best aligns with your business’s risks.
What Is Technology Errors & Omissions Insurance?
Technology errors & omissions insurance (Tech E&O) is specialized coverage designed for technology companies or businesses that provide tech-based products or services. It helps protect against claims arising from mistakes, lapses, or failures in delivering your technology services or products.
For example, imagine your SaaS platform accidentally goes offline for 48 hours, interrupting critical operations for hundreds of your clients. Several customers file claims to recoup lost revenue caused by the downtime. A Tech E&O policy can provide coverage for defense costs and settlements in these situations.
Industries Best Suited for Tech E&O Insurance
Some industries best suited for a Tech E&O insurance coverage include:
– Software as a Solution (SaaS) companies
– IT consulting firms
– Software developers
– Web designers
– Any other business that engages in similar technology-focused activities
What is Miscellaneous Professional Liability Insurance?
Miscellaneous Professional Liability (MPL) insurance provides coverage for businesses and professionals outside the tech space who offer specialized services or advice. This policy protects against claims of negligence, errors, or omissions that occur while performing professional duties.
Unlike Tech E&O, which focuses on technology-related risks, MPL is broader and applies to a wide variety of professional service providers. If a client alleges that your advice, services, or expertise caused financial harm, MPL can cover the legal costs and damages.
For example, a marketing agency creates a campaign for a client that unintentionally leads to reputational damage and financial losses. MPL would help cover the costs of the resulting claim.
Who Needs MPL Insurance?
Almost any business that provides professional advice or services—outside of the technology sphere—can benefit from thorough MPL coverage, including:
– Consultant (business, manatement, financial, etc.)
– Marketing and advertising agencies
– Architects
– Real estate professionals
– And other business whose services focus on providing expert advice
Does Your Business Need Both Tech E&O and MPL Insurance?
Depending on your business model, mixing Tech E&O and MPL insurance might make sense.
For example, your marketing agency specializes in creating ad campaigns and providing digital advertising strategies, but also develops and maintains custom marketing platforms or analytics tools for clients. A combined Tech E&O and MPL approach ensures both service areas are protected.
Further, if you’re a SaaS provider that sells subscription-based tools to businesses while also offering training sessions or consulting services for process implementation. This is a scenario where it may not be a matter of Tech E&O or MPL, but choosing both policies to ensure there are no coverage gaps.
The key is to evaluate the specific services that your business provides when determining if one or both policies are right for you. This includes identifying common risks to your industry, reviewing your client contracts, and consulting with a trusted insurance advisor.
Protecting Your Business Through Specialized Insurance Solutions
In the Tech E&O or MPL analysis, both are invaluable tools for managing risks in your business, but choosing between them depends on the specific nature of your work.
For tech startups, a Tech E&O policy is typically the most relevant choice given its tailored coverage for technology failures, cyber risks, and unmet performance expectations. On the other hand, small businesses delivering non-tech professional services are often well-served by MPL coverage, given its wide applicability to various industries.
It’s important to note that these policies are not interchangeable, so selecting the wrong one might leave your business exposed to costly risks. Depending on the nature of your business, having both coverages in place might be the right choice.
Still uncertain about which coverage you need? BR Risk Group™ Specialty Insurance is here to help. Our team of experts specializes in guiding startups and small business owners through the intricacies of insurance, ensuring you find the right protection for your specific needs.
Disclaimer: This content is for informational purposes only and should not be considered as legal or financial advice.