FCA authorised · FRN 724952 0117 325 0027Quote & buy →
Insurance explained
Professional liability insurance for technology consulting firms is cover for claims that your advice, code or IT work caused a client loss, called PI or tech E&O in the UK. It matters because client contracts and failed projects can create claims far larger than your fees.
Part of: Professional indemnity insurance
In short
Professional liability is the US name for what UK insurers usually call professional indemnity or, for tech firms, technology errors and omissions. It commonly covers defence costs and damages when a client alleges a failed implementation, missed service level, data loss or unintentional IP infringement caused them a loss. It is normally claims made, so continuous cover matters. It does not usually cover your own systems after a cyber attack, which is what cyber insurance is for. Liability caps and indemnities in your MSA should match your policy, and US clients may need US jurisdiction cover.
Professional liability insurance is the term most often used in the United States for cover against claims that your professional work, advice or service caused a client financial loss. In the UK the same idea is usually called professional indemnity (PI) insurance, and for technology businesses it is often sold as technology errors and omissions, or tech E&O. The labels overlap heavily; our page on professional liability vs professional indemnity explains the terminology.
For a technology consultancy, systems integrator or software house, the policy typically pays defence costs and any damages or settlement where a client alleges that a project, configuration, piece of code or recommendation was negligent or failed to meet the agreed standard. UK PI is normally written on a claims made basis, so the policy in force when the claim is first made, rather than when the work was done, is the one that responds. See claims made vs occurrence for why that matters when you change insurer or stop trading.
Policies for tech firms are commonly written on a civil liability basis, which is broader than negligence alone and can respond to unintentional breach of contract, breach of confidence and some IP claims, subject to the wording. Our main technology errors and omissions insurance page covers the product itself.
This is a general summary. Every policy is subject to its own terms, limits, excesses and exclusions.
| Scenario | Typical tech PI position | Points to watch |
|---|---|---|
| Failed or late implementation causing client losses | Commonly covered where caused by an error or negligence | Pure delay penalties and fixed liquidated damages may be excluded |
| Missed service levels | May be covered if the miss results from a covered error | Service credits you agreed to pay are often excluded as contractual |
| Client data lost or corrupted by your work | Often covered under PI or civil liability wording | Breaches caused by a hacker usually sit under cyber |
| Unintentional IP infringement in delivered code | Often covered, sometimes sub-limited | Patent infringement and US claims may be restricted |
| Your own systems down after ransomware | Not usually covered by PI | Needs first party cyber cover |
| Fee disputes and refund demands | Usually excluded | Some policies cover defence where a counterclaim is made |
| Deliberate or dishonest acts | Usually excluded for the person responsible | Innocent partners or directors may still be protected |
More worked examples are in IT consultant and developer claims: project and SLA examples and software delivery and project failure PI claims. For IP specifically, see does PI cover intellectual property infringement.
The examples below are illustrative only and are not real claims.
Data protection adds another layer. Under Article 82 of the UK GDPR, a processor can be liable for damage where it has not complied with processor obligations or has acted outside the controller's lawful instructions, and the ICO's guidance on controller and processor contracts sets out what those contracts must include. Consultancies that host or handle client data should expect clients to ask how these liabilities are insured.
Most tech consulting work is done under a master services agreement (MSA) with statements of work beneath it. The liability clauses in the MSA often matter as much as the policy itself. Common points include a cap on liability, often linked to fees or to the insurance limit; exclusions of indirect and consequential loss; uncapped indemnities for data protection, confidentiality or IP; and an obligation to hold PI and cyber cover at stated limits for a number of years after the contract ends.
PI policies commonly exclude liability you take on by contract beyond what you would have had in law, so an uncapped indemnity or a warranty of fitness for purpose may not be fully insured. Agreeing to a cap that is higher than your PI limit creates a gap. Our guides to how PI treats contractual liability and client contract PI requirements explain how to read these clauses alongside the policy.
Clients also ask for cyber cover because they want to know a security incident at the consultancy will be funded. The ICO's security guidance says processors must take the measures Article 32 of the UK GDPR requires, which is one reason clients include security and insurance clauses together.
A common misunderstanding is that a tech PI policy covers any loss involving computers. It does not. PI responds to claims that your service caused someone else a loss. Cyber insurance mainly covers the consequences of a security incident, including your own costs such as forensic investigation, data restoration, notification and business interruption, plus liability to others arising from the breach.
Many insurers offer a combined technology policy that writes tech PI and cyber together, sometimes with a shared limit. That can reduce disputes about which section pays, but a shared limit can be used up by one large event. Separate policies give independent limits but need careful checking at the boundary. See combined technology insurance: tech PI and cyber, cyber insurance for IT consultants and where PI ends and cyber begins.
Directors of tech companies may also want D&O insurance, which protects individuals rather than the firm's professional work.
Apex arranges professional indemnity, tech E&O and cyber cover for UK technology consultancies; a broker reads every enquiry.
In practice, largely yes. Professional liability is the term commonly used in the US, while professional indemnity is the usual UK term. Both cover claims that your professional services caused a client financial loss. Tech E&O is a version aimed at technology firms. The detail of what is covered depends on the wording, not the name.
It commonly does where the failure results from an error, omission or negligence in your work and the client claims a financial loss, subject to the policy terms. It usually will not cover refunds of your fees, the cost of simply finishing the job, or penalties you agreed in the contract beyond your legal liability.
Often yes, provided the policy's territorial and jurisdiction limits include claims brought in the US and the limits meet the contract. Some insurers restrict or price US exposure differently. A broker can usually arrange evidence of cover in the format the client asks for, once terms are confirmed.
It depends on the cause and the wording. If your error exposed client data, PI may respond to the client's claim. If a criminal attack on your own systems caused the breach, cyber insurance is more likely to respond. Many tech firms hold both, or a combined policy, to avoid a gap.
Yes. A cap that is higher than your PI limit leaves you exposed for the difference, and uncapped indemnities may not be fully insured because PI policies commonly exclude liability taken on by contract beyond the law. Checking the MSA alongside the policy before signing helps avoid gaps.
Tell us what your business does, your turnover and any claims. A broker reads every enquiry and comes back with options. No fee for a quote. Or call 0117 325 0027.
Get a PI quote Request a callbackApex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information, not advice on your individual circumstances, and it does not guarantee that cover will be available or on what terms.
