In India, Errors & Omissions (E&O) insurance is commonly issued as Professional Indemnity (PI) Insurance, regulated by the Insurance Regulatory and Development Authority of India (IRDAI).
For tech and EdTech companies delivering software, integrations, advisory services, or managed services, PI/E&O addresses claims alleging professional negligence.
What Professional Indemnity Insurance Covers (Under Indian Policy Structure)
Indian PI policies are typically written on a claims-made basis.
They are designed to respond when:
- A client alleges a professional error or omission.
- The alleged act caused financial loss.
- A formal claim is made and reported during the policy period.
Subject to policy terms and exclusions, coverage may include:
- Legal defence costs
- Investigation expenses
- Court-awarded damages or negotiated settlements within policy limits
Coverage depends strictly on the specific policy wording, endorsements, exclusions, and limits.
Common Tech Claim Scenarios in India
Typical triggers include:
- Software defects allegedly causing client financial loss
- Failed implementations
- Missed project milestones
- SLA disputes (uptime, performance guarantees)
- Configuration errors during migration
Not every dispute qualifies as an insured claim. Contractual penalties and performance guarantees may be excluded unless specifically endorsed.
Why Defence Costs Matter
Even if liability is disputed:
- Legal representation is required.
- Arbitration proceedings may begin.
- Expert technical review may be needed.
For many Indian tech companies, defence cost support is the primary value of PI insurance.
Claims-Made & Retroactive Date (Critical Indian Concept)
Most Indian PI policies are:
- Claims-made
- Subject to a retroactive date
Continuous renewal is essential to preserve coverage for past work.
If the policy lapses, earlier acts may lose protection.
PI vs Cyber Insurance (Do Not Confuse)
Under Indian insurance practice:
Professional Indemnity → covers client financial loss due to service errors.
Cyber Insurance → covers security incidents, ransomware, data breaches, incident response costs.
They address different risk categories and are often purchased together.
Important Disclaimer
Professional Indemnity insurance does not replace robust contracts, change management, or documentation discipline. It is a financial risk transfer tool regulated under IRDAI norms.
