Cybersecurity is important for businesses big and small. That’s why many small businesses choose to secure their digital assets and insure them in case of an attack. Luckily, there are two main kinds of digital security coverage: technology errors and omissions insurance (tech E&O) and cyber insurance. While both deal with technology, there are critical differences between tech E&O and cyber liability insurance.

The main distinction comes down to the source of a technology failure, either your business (tech E&O) or an outside party (cyber insurance):

  • Tech E&O insurance — Primarily third-party coverage, tech E&O usually protects you if a professional mistake made by you or an employee of your company leads to a cybercrime against one of your clients.
  • Cyber insurance — Cyber insurance usually provides both first-and third-party coverages to protect you if your company or your clients are the victims of a cyberattack.

Let’s get down to the basics (or 1s and 0s for you techies) on these types of insurance coverages.

What is tech E&O insurance?

Tech E&O is insurance coverage for mistakes made by a technology company that impacts its clients or customers. In general, errors and omissions insurance is also commonly known as professional liability insurance. It shields your company when a client sues you, claiming that your mistakes or negligence caused them financial loss.

In the case of tech E&O, the insurance coverage relates specifically to disputes over your technology-related service provided to a customer. Here are a few examples of E&O risks for a small technology business that may lead to a lawsuit:

  • Neglecting to perform a particular security protocol to safeguard a client’s data.
  • Giving technical advice that ends up harming your client’s business.
  • Lying about the extent of your expertise and/or services.
  • Bringing in a contractor who fails to perform for your client or does faulty or incomplete work
  • Missing a deadline to provide an agreed-upon software update or another service.

If a customer sues you, tech E&O insurance can provide the investigation and defense of a claim. It can also cover payment for damages due to a settlement or court order.

Negligence and accidents are not the only reasons that data breaches happen. Sometimes, even the most secure systems fall victim to an attack. That’s where a cyber liability insurance policy can help.

What is cyber insurance?

Cyber liability insurance protects your company when your business is a victim of cybercrime. Importantly, these protections are in place regardless of your level of fault (for instance, if your security infrastructure was lacking), unless you intentionally caused the breach.

If a hacker penetrates your systems and seizes control of your company’s or your customers’ data, the financial consequences can be very costly. But cyber liability can help recover some of your losses.

Cyber insurance usually covers:

  • Investigation and resolution of the cyberattack
  • Ongoing monitoring during and after a breach
  • Notification and management of impacted clients
  • Loss of business income
  • Extortion and ransom costs
  • Rehabilitation of reputation, such as public relations services
  • Damages to injured third parties due to the breach of their protected information
  • Investigation and defense of claims from third parties

In the event of a cyberattack, the initial blow and the aftermath can cripple a business. Lost or stolen data is a significant issue, but it is far from the worst damage that an attack can do. For example, cybercriminals may leverage seized resources as ransom, demanding additional funds from your company. They can also create additional vulnerabilities in your systems, opening the company to further cyber threats.

Which policy does your business need?

Breaches at Fortune 500 companies have proven that no matter how air-tight your cyber defenses are, there are vulnerabilities and loopholes for hackers to exploit. In fact, cybercriminals actually favor small businesses, as they tend to be less likely to have Chief Information Security Officers or full-time dedicated IT security staff.1

In the face of complex attack scenarios, the best defense comes down to a one-two punch. You need cybersecurity best practices coupled with a cyber insurance policy — just in case there’s a failure in your cyber security measures.

But which policy do you need, tech E&O or cyber insurance? While some companies may need both forms of coverage, others will feel sufficiently covered with one. Here are scenarios for both:

  • Tech E&O insurance — If you sell technology-related services or products, such as web hosting services, technology consulting, or installing software as part of your business, tech E&O can help protect you from the negative consequences of professional mistakes made by you or a company employee.
  • Cyber insurance — If you keep a significant amount of customer data in your system, cyber insurance can help protect you from the fallout of a cyberattack on your systems, and protect your customer’s sensitive information from being shared.

Pop quiz: Tech E&O vs. cyber insurance

Did you get all that? Let’s do a quick reboot of what we’ve learned. The first steps to ensuring your company’s data safety are to maximize your cyber defenses (minimizing the chance of attack) and to follow best practices concerning client-facing technological responsibility. Create a strong cyber security shield and you’ll deflect as many attacks as possible.

But if something does slip through the cracks, insurance can help keep you afloat. Keep in mind these similarities and differences between tech E&O and cyber insurance:

  • Both forms of insurance protect against cyber threats
  • Tech E&O coverage focuses on lawsuits involving errors that hurt your clients
  • Cyber insurance focuses on security breaches that harm your company or your clients’ private information

Now that you understand more about each form of insurance, you’re better equipped to seek out the coverage that’s right for you. Get your digital assets insured so you can focus on taking a “byte” out of your competition!

And if you need small business insurance, Thimble’s got you covered. Click “Get a Quote” here or download the Thimble app, answer a few questions, and get a tailor-made insurance policy in minutes.


  1. Verizon. 2021 Data Breach Investigation Report.