General Liability Won’t Cover Tech Errors and What to Do Instead

Article Last Updated 03/13/2026

Article Reviewed by a licensed insurance professional: Sam Meenasian (CA dept of insurance license #0F75955).

Estimated reading time: 7 minutes

Many small businesses today are underinsured. Yes, this might even include your business. Perhaps you have commercial general liability insurance, but the truth is, while this type of insurance is essential, there’s a lot that it doesn’t cover.

Here, we’ll discuss what your general liability does and doesn’t cover. We’ll also talk about how you can close the gap to help expand your coverage and keep your business protected as much as possible.

What Your General Liability Will Cover

General liability is designed to cover third-party injuries or property damage caused by you.

For instance, if a customer breaks their leg after tripping on something in your store, your policy would provide coverage.

It can also protect against damage to third-party property. This could include damage to a client’s device that was being repaired.

If your insurer agrees to cover the claim, they can also reimburse for legal expenses, if necessary.

How Technology Complicates Things

Operating a tech service company has unique risks and challenges.

A client may sue you after you delivered poor consulting advice, causing their database restructuring project to fail.

Your client may lose hundreds of thousands of dollars due to a bug in the software you developed.

Or, you might even cause a client to face downtime after their system crashes due to a misconfiguration on your part.

Coverage Gaps for Tech Companies

Each of the latter situations has something in common: they don’t include bodily injury or third-party property damage. But the risks are still clearly there, and newsflash: it’s expensive, and you’re responsible for covering the costs.

Unfortunately, your general liability policy won’t be helping you out in these cases, as they exclude electronic data liability.

Not only does general liability exclude electronic data, but it also excludes pure financial loss with no physical damage and damage to your work due to your product/service failing.

Even Non-Tech Businesses Have Tech Risks

Maybe you’re not in tech at all, but provide another service like refrigerator repair, construction, or plumbing.

Either way, you likely still use technology in some shape or form, from scheduling jobs with clients via software to installing digital thermostats. It’s little things like these that could increase your risk in business.

Your scheduling software could get hacked and send a phishing e-mail to all of your customers. You calibrated a refrigerator’s automated temperature sensor wrong. Or, maybe you faced a business interruption due to a cyberattack on your BIM software, which caused you to lose schedules and project blueprints.

While you or your client experiences a financial loss, and you risk legal trouble, your general liability insurer will say, “Sorry, we can’t help with that.”

What to Do Next

1. Check your general liability policy.

Are you covered under general liability, and do you know what you’re excluded from?

Inquire with your insurance company if data-related or intangible damages are covered. See if your policy excludes “financial loss” or damages due to “work you performed.”

Exclusions like these are common with most general liability policies. However, it never hurts just to make sure.

2. Consider an additional policy.

For tech-type exposure: Technology Errors & Omissions (Tech E&O) or Professional Liability (Errors & Omissions) is what you are looking for. This type of coverage is aimed at covering the “we messed up your software/service, and you lost money” kind of risk.

For businesses that work with data or are at risk of a data breach, Cyber Liability insurance is also a strong consideration.

3. Make your insurance policy suit your company.

If you are doing services, such as consulting or software, for clients, then you are absolutely in the range where E&O is applicable.

If you are just fully traditional and fully trade-focused and do not interact with the technology in any way that affects your customers, you may not need it as much. But with how technology seeps into everything, it is definitely something you will want to chart.

Make sure your definitions of your policies actually reflect what you do. They should not be just a generic “construction contractor doing plumbing & pipefitting” if you also install IoT water sensors, for instance.

4. Inquire with your broker/agent using realistic examples

Examples of stories:

• “What if I implement an installment and it fails, resulting in revenue loss for the client?”
• “What if I develop software and a bug causes the operations of the client to shut down for one week?”
• “What if I give the client advice and the operations cause the client financial loss?”

If the response from your insurer is “We’ll cover that,” you can then follow up with:

“What policy will cover this risk, and under what terms is it excluded?”

5. Keep your client contracts clean.

“Many disputes also arise because there is an ‘SLA contract’ with the client that has tough language, “we guarantee zero downtime, or “we won’t refund you,” then something goes wrong.”

Well-defined, realistic language, processes that are traced and followed, and proofs that are delivered on time are what can really help insurance underwriting.

Why There’s a Gap in Tech-Related Coverage

Insurers price risks based on how severe they are and how frequently they have occurred historically. Injuries and property damage are relatively easy for insurance providers to price. These have been common claims for decades.

Claims involving technology, on the other hand, aren’t always understood by insurers. They’re newer, and tech-related incidents can vary drastically, especially between industries. This is why insurers have separate coverages for Tech E&O, E&O, and Cyber. Keeping these separate allows insurance companies to price them accordingly, with higher premiums for bigger risks.

Knowing this will help you understand why it costs more to cover tech gaps.

Why Coverage Gaps Should Worry You

You might think something won’t happen to you, but even startups experience mistakes, accidents, and losses. This is why having the proper insurance is imperative.

These facts will have you scrambling to get more insurance:

• One uncovered single claim, which can cost thousands of dollars, can cause a small business to close up permanently.
• Many clients require proof of tech-related coverage. Not having this insurance could result in lost business.
• Having more than just general liability makes you look more reliable and professional in your field.

A Case-Friendly Example

A while back, I was advising a software company. One day, a product they deployed for a hospital failed shortly after it went live. While the physical equipment was still in one piece, no other property damage occurred, and nobody was hurt as a result of the failure, the hospital wasn’t able to access its appointment system for a few days.

In response, the hospital demanded hundreds of thousands of dollars for remediation of the situation and reimbursement for lost revenue.

The software company had general liability insurance. However, because no property damage or injury resulted in this scenario, their claim was denied.

The software business had to pay completely out of pocket since it lacked Tech E&O.

Five Key Takeaways

1. Tech failures and other errors aren’t covered under general liability insurance unless third-party injury or property damage occurred.
2. Are you involved in providing services or consulting that is tech-related? In this case, you require coverage that goes beyond a general liability policy.
3. Tech-related risks can be covered by Tech Errors and Omissions (Tech E&O) or Professional Liability Insurance.
4. Your policies should cover what your business actually offers, without any gaps or misunderstandings on your part.
5. Being insured is more than protecting your business financially in dire events. It’s also a way to ease stress and helps provide a chance to expand the business, which increases your authority too.

Bridge the Gap Before It’s Too Late

At USA Business Insurance, we’ve seen what business owners across all industries have to deal with. They might assume their general liability insurance will back them up, but oftentimes, there are heavy exclusions. Not having the applicable insurance on hand could lead to thousands of dollars that they have to pay out of pocket.

Whether you run a tech company with unique risks or simply want to make sure you’re well-insured, we can help you decide how to best extend your protection beyond general liability. This way, you can worry less about mistakes and focus more on the operation of your business.

From coast to coast, I’m here to help you out. Contact us to fill in your business’s coverage gaps today.

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