The Question Every Tech Founder Asks

It's usually the first question, and the honest answer is: it depends. But "it depends" isn't useful when you're budgeting. What is useful is understanding exactly what it depends on — because once you see the inputs, you can influence some of them.

Tech E&O premiums are set by underwriters evaluating risk. Here are the seven factors that matter most.

1. Your Revenue

Revenue is the anchor. A firm billing $200,000 a year faces smaller potential damages than one billing $5 million, and premiums scale accordingly. Expect underwriters to ask for your most recent fiscal year revenue and, for growing companies, a projection for the current year.

2. What You Actually Do

Not all "tech" work carries the same exposure:

  • Custom software development and consulting — moderate exposure, driven by project deadlines and deliverables
  • Managed IT services and infrastructure — higher exposure, because you're responsible for systems that keep clients operational
  • SaaS platforms — exposure depends on uptime commitments, data handling, and contract terms
  • AI, fintech, healthtech, and crypto-adjacent work — specialized exposure that may require specialty markets

The more critical your work is to a client's operations, the larger the alleged damages can be.

3. Your Contracts

This is the factor tech firms most often overlook. Underwriters read your contracts:

  • Do you use written agreements with every client?
  • Do they include limitation of liability clauses?
  • Do you warrant outcomes ("the software will be error-free") or disclaim them?
  • Do you accept unlimited indemnification?

A firm with tight contracts can be materially cheaper to insure than an identical firm with loose ones. If your contracts are stock templates from years ago, fixing them before you apply can pay for itself.

4. Claims History

Prior claims, demands, or even threat letters raise questions. Insurers evaluate what happened, how it was resolved, and what you changed afterward. A documented remediation is far better than an unexplained dispute. First-time buyers with no history aren't penalized — but they also aren't rewarded with insider pricing.

5. Limits and Deductible

Coverage limits typically start at $1 million per claim. Higher limits cost more, but not proportionally — moving from $1M to $2M usually costs meaningfully less than doubling your base premium. Your deductible works the other way: accepting a higher deductible lowers premium in exchange for more first-dollar risk.

6. Client Concentration

If one client represents 60% of your revenue, underwriters see concentration risk: if that relationship sours, the claim is large relative to your whole book. Diversified client bases are easier to price.

7. Security and Operational Practices

Carriers increasingly ask about security posture — access controls, backup practices, vendor management, and how you handle client data. You don't need enterprise maturity, but documented basics help.

What This Means Practically

1. Fix contracts first. Limitation of liability and clear deliverables are the highest-leverage change most firms can make.

2. Know your numbers. Accurate revenue and headcount prevent mid-term adjustments.

3. Buy the limit your contracts imply. If your contracts expose you to seven-figure damages, a $500,000 limit is false economy.

4. Compare markets. As an independent broker, PRIA submits your profile to multiple A-rated carriers — underwriting appetites differ, and the spread between quotes for identical firms is often significant.

Get Real Numbers

We'll shop your profile across A-rated carriers and show you actual quotes, not estimates. Start with our tech E&O quote form or call (888) 998-7742.

Important

This article is general information, not insurance or legal advice. Actual premiums, terms, and eligibility are determined by each carrier's underwriting and vary by applicant. Nothing here is a quote, offer, or guarantee of coverage. Policy language controls.