Professional Liability for IT Services

Who this coverage is for

IT services live at the seam between PL and cyber. PL responds when your work is alleged to have caused a client financial loss — failed implementation, missed deliverable, defective code, or wrong recommendation. Cyber responds when a third-party data breach or ransomware event hits your operation or your client's. We commonly write both lines together because the claims often touch both sides; this page is specifically the PL line for service-error claims.

Common claim examples

• Software implementation produced data corruption or extended downtime
• Project missed deadline; client alleges damages from delay
• MSP-managed system experienced an outage attributed to negligent maintenance
• Dev shop deliverable did not match contracted specifications
• Recommended technology stack proved unsuitable; client alleges advice was negligent

Claims-made structure

Professional liability is almost always written on a claims-made basis. The policy responds to claims first reported during the policy period (or extended reporting period) for incidents that occurred on or after the retroactive date. This is the opposite of occurrence-based GL — and the difference matters enormously for tail coverage when you change carriers.

Retroactive date and prior acts

The retroactive date is the earliest date for which a claim can trigger the policy. When you switch carriers, you typically want the new policy to honor your prior retroactive date so claims for old incidents (reported during the new policy period) are still covered. We confirm prior-acts coverage during the quote so there is no gap on your historical work.

What this coverage does NOT cover

• Bodily injury or property damage to third parties — that is general liability
• Employee injury — workers compensation
• Vehicle accidents — commercial auto
• Damage to your office or equipment — commercial property
• Intentional or fraudulent acts
• Claims arising before the retroactive date

What affects your premium

• Years of professional experience
• Annual gross billings or commissions
• Largest project value or transaction size
• Existing claims and prior incident history
• Use of subcontractors or sub-producers
• Coverage limits desired (commonly $1M, $2M, or $5M)
• Retroactive date desired (further back = higher premium but tighter coverage)
• State of operation and licensing status

Frequently asked questions