Professional Indemnity Insurance

Professional Indemnity Insurance for Technology and Software Businesses in South Africa

Professional indemnity insurance covers claims that a technology business’s work, advice or software caused a client financial loss: a failed implementation, defective code, a missed deadline or a service that did not do what the contract promised. For most technology businesses it sits alongside cyber insurance, which answers a different set of risks.

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What professional indemnity covers for technology businesses

Technology professional indemnity, sometimes called technology errors and omissions cover, responds to claims by clients for financial loss caused by the services you provide or the software you build. Cover typically includes:

Failed or delayed implementations

Claims where a project overran, failed to deliver what was agreed, or had to be redone at the client's cost.

Defective code and system errors

Claims that software, configuration or integration errors caused the client financial loss.

Negligent advice and specification

Technology advice, architecture decisions or product recommendations that a client relied on and that proved wrong.

Breach of contracted service levels

Claims arising from a failure to meet agreed service levels or availability commitments, subject to the policy wording.

Sub-contracted development

Exposure created when work is passed to freelancers, offshore teams or specialist partners.

Legal defence costs

The cost of defending covered claims, alongside any damages awarded, within the limit of indemnity.

Technology PI and cyber insurance: where the line sits

These two covers are regularly confused, and many technology businesses hold one while assuming it does the work of both.

Professional indemnity answers to your clients. It responds to claims that your work, advice or software caused them financial loss.
Cyber answers for your own systems and data. It covers response costs after an incident, such as forensics, restoration and notification, and liability arising from data you hold.
They overlap. A security flaw in software you built that leads to a client breach can touch both. Which policy responds depends on the wordings and how the claim is framed.
Many businesses hold both. Some markets offer combined technology PI and cyber wordings, which reduces the risk of a gap between the two.

Our page on specialised cyber insurance covers the cyber side, and our article on liability for third-party cyber breaches looks at where responsibility sits when someone else is breached.

Where the exposure usually comes from

Most technology PI claims start in one of these places:

Fixed-price projects with moving scope. Where the delivered system does not match what the client believes was agreed.
Contract terms. Liability caps, broad indemnities and warranties that promise outcomes rather than reasonable skill and care.
Sub-contracted and offshore delivery. Where responsibility for a failure sits with a partner but the claim arrives at your door.
Third-party and open-source components. Licensing and defect exposure inherited from components you did not write.
Integrations and data migrations. Work that touches live client systems and data, where errors surface immediately.
AI features and automated decisions. Where a system produces an output the client acts on, and the basis of that output is hard to explain.

On the last point, our article on AI use policies and professional indemnity sets out what insurers are starting to ask about.

What Berkley Risk reviews for technology businesses

Technology PI is rated on what the business delivers and what it has promised contractually. Before arranging cover, Berkley Risk reviews:

Revenue mix and services

What the business actually does: custom development, licensed software, hosting, managed services or consulting.

Contract terms and liability caps

Liability caps, indemnities and warranties in client agreements, and any unlimited liability clauses.

Client sectors

Whether clients are in regulated sectors such as financial services or healthcare, where contractual standards are higher.

Sub-contracting and offshore delivery

Which parts of delivery are sub-contracted, and how those contracts allocate responsibility.

Security controls and incident history

Development practices, testing, access controls and any past incidents or disputes.

Retroactive date and continuity

The retroactive date on existing cover, and what happens to completed projects if cover changes or lapses.

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Specialised cyber insurance

Breach response, ransomware, business interruption and privacy liability for SA businesses.

Professional indemnity insurance

How professional indemnity works across professions in South Africa.

Can my business be liable for third-party cyber breaches?

Where responsibility sits when a supplier or client is breached.

Why SA professional firms need an AI use policy

What insurers are asking about AI use, and how it affects professional indemnity.

Frequently asked questions

Does a software company need professional indemnity insurance?

There is no legal requirement in South Africa, but client contracts frequently require it, particularly with corporate and regulated clients. It is the cover that responds when a client says your software or services caused them financial loss.

What is the difference between technology PI and cyber insurance?

Professional indemnity responds to claims by your clients about your work. Cyber responds to incidents affecting your own systems and data, and to liability arising from data you hold. A software flaw that causes a client breach can involve both, depending on the wordings.

Does professional indemnity cover penalties for missing a deadline?

Usually not. Liquidated damages and contractual penalties are commonly excluded, because they are agreed consequences rather than damages for negligence. Cover generally responds to claims for loss caused by negligent work, subject to the wording.

Are we covered if a sub-contractor or offshore developer causes the loss?

It depends on the policy wording and on your contracts. Many technology PI wordings cover the insured’s liability for work sub-contracted to others, but the position should be confirmed rather than assumed.

Does the cover include intellectual property claims?

Some technology PI wordings include cover for unintentional intellectual property infringement, and others exclude it. It is one of the specific points to check when comparing wordings.

What is a retroactive date and why does it matter for software businesses?

Professional indemnity is written on a claims-made basis, and the retroactive date sets how far back covered work can go. Systems delivered years ago can still generate claims, so changing insurer without preserving the retroactive date can leave earlier work uncovered.

Do we need cover after a client contract ends?

Claims can arrive long after a project is delivered. Because cover is claims-made, a policy needs to be in force when the claim is made, which is why run-off cover is arranged when a business stops trading or lets cover lapse.

How much professional indemnity cover do technology businesses need?

There is no standard figure. The limit is usually driven by what client contracts require and by the size and criticality of the systems delivered.

Professional indemnity for technology businesses across South Africa

Berkley Risk arranges professional indemnity insurance for software developers, SaaS providers, IT services businesses and technology consultancies across South Africa. Contact us to discuss your client contracts and cover.

Berkley Risk (Pty) Limited (Registration Number 2017/412000/07) is an authorised Financial Services Provider under the Financial Advisory and Intermediary Services Act No 37 of 2002 – FSP#54407

Berkley Risk (Pty) Limited (Registration Number 2017/412000/07)

Authorised Financial Services Provider under the Financial Advisory and Intermediary Services Act No 37 of 2002 – FSP#54407