What tech E&O responds to
Tech E&O is a liability policy for the performance of what you sell. If a customer alleges that your model gave inaccurate output, that your platform did not do what the contract promised, or that your negligence caused them to lose money, tech E&O is the policy that pays for the defense and, where covered, the settlement or judgment. For an AI company this is often the most important policy, because the product itself is probabilistic and a customer's loss can trace back to an output.
Contracts with enterprise customers usually require it, and the required limits tend to rise with the size of the customer.
What cyber liability responds to
Cyber liability responds to security events. It typically includes first party costs, such as forensic investigation, notification, credit monitoring, data restoration, business interruption and ransomware response, and third party liability when others sue over a breach of data you hold. AI companies hold unusually valuable data, including training sets, customer prompts and model weights, so a breach can be both costly and commercially sensitive.
Where the two overlap and where they do not
A single incident can touch both policies. A security failure in your platform could trigger breach response costs under cyber and a customer claim for resulting losses under tech E&O. The policies are written separately, with their own definitions, exclusions and limits, and some carriers sell them as a combined form while others keep them apart.
The gaps are the part to examine. Policies written before AI became common often say little about model output, and some contain exclusions or conditions that matter for AI products. Read the definitions of wrongful act and technology services carefully, and ask your broker how each policy treats claims arising from model output.
How to decide what you carry
Start with your contracts and your data. If customers pay you for a service whose failure could cost them money, you need tech E&O. If you store customer data or train on sensitive material, you need cyber. Most AI companies that sell to businesses carry both, and add directors and officers coverage as they raise capital.
- Sell software or models to businesses: tech E&O and cyber.
- Hold sensitive customer data: cyber at meaningful limits.
- Raised venture funding: add directors and officers liability.
- Employ a growing team: add employment practices liability.
Last updated October 22, 2026. Written by the Alton Risk placement team.