Technology work carries exposures that general business insurance does not address. A line of faulty code, a migration that loses data, a project that overruns, or advice that points a client in the wrong direction can each produce a claim that runs well beyond your fee. Professional indemnity insurance is designed to cover the legal defence costs and any compensation when a client alleges that your technology services were negligent.

It also tends to be a commercial necessity rather than just a safeguard. Enterprise clients, agencies and public-sector frameworks frequently require a minimum limit of indemnity before they will sign, so the cover often determines whether you can win the work at all. Our technology insurance and professional services insurance specialisms set out the wider programme.

Cover varies by insurer and wording, but a technology-aware policy generally responds to claims arising from your professional services, including:

• Negligent advice or services, such as a flawed system design or a recommendation that causes loss.
• Software defects, bugs and errors in code you developed, where they lead to a client loss and a claim.
• Failed or delayed projects, including implementations that do not perform as specified.
• Breach of intellectual property rights, such as unintentional infringement of copyright or licensing.
• Loss of client documents or data in your care, and the cost of restoring it.
• Defence costs of investigating and defending a covered claim.

Because the policy is generally written on a claims-made basis, the retroactive date, the limit of indemnity and run-off cover all matter, particularly if you have been trading for some time or are switching insurer. Our professional indemnity guide explains these clauses in detail.

This is the question technology firms ask most, and the two covers are easy to confuse. In simple terms:

• Professional indemnity responds to your work causing a client a financial loss (negligence, errors, failed projects). A typical claim is a client suing over faulty software or a failed implementation.
• Cyber insurance responds to incidents affecting data and systems (breach, ransomware, hacking) and covers your own response costs and business interruption as well as third-party claims.

Most technology businesses need both, because a single incident can trigger each. They are often arranged together, and in some wordings blended, so that a claim does not fall into a gap between the two. We can structure them to dovetail rather than overlap or conflict. See our cyber insurance for technology companies guide for more on the cyber side.

For independent IT consultants and contractors, professional indemnity is usually the cover clients ask about first. Agencies, end clients and frameworks commonly require a set limit, often alongside public liability and, where you employ anyone, employers' liability. Many contractors arrange these together as a combined package so a single policy satisfies most contractual requirements. See our companion guide on professional indemnity and public liability insurance for how the two covers work together.

If you work through a personal service company or on rolling contracts, it is worth keeping cover continuous so your retroactive date is preserved across renewals, and reviewing the limit whenever you take on a larger or higher-risk engagement.

As a technology company scales, its exposures grow with its contracts. Enterprise customers tend to demand higher limits of indemnity, broader wordings and sometimes uncapped or onerous liability clauses, all of which influence the cover you need. Holding large volumes of customer data also raises the cyber dimension, so the professional indemnity and cyber programmes should be reviewed together.

Growing firms often add directors' and officers' cover and review their limits at funding rounds or major contract wins. If you sell or distribute hardware as well as software, products liability may also be relevant. These connect to the wider professional services and technology insurance programmes we arrange.

There is no single correct limit. The right level is generally driven by three things: what your client contracts require, the value and risk of the projects you work on, and the liability you accept in your terms. Limits are set to match the cover your client contracts require, and larger enterprise and public-sector work sometimes requires more.

Check the contract, not just the premium. Client and framework contracts usually specify both the minimum limit and the basis of cover. It is worth confirming your policy meets the exact wording before you sign, rather than discovering a shortfall at renewal or at claim stage.

As with all professional indemnity, premiums are rated on the likelihood and potential size of a claim. For technology businesses the main factors tend to be:

• Fee income or turnover: the primary measure of exposure; larger revenue generally means larger potential claims.
• Type of work: advice, custom development and supplying a product each carry a different claims profile.
• Limit of indemnity: higher limits and broader bases of settlement tend to increase premium.
• Claims history: previous claims or known circumstances are a strong rating factor.
• Geography: overseas clients, and any US or Canadian exposure, can increase premium significantly.
• Contracts: uncapped liability and onerous client terms increase exposure and cost.

We benchmark the market against your exact risk profile, from solo contractor to scaling SaaS, and can structure professional indemnity and cyber together for efficiency.