Type of Claim:
Errors & Omissions (E&O)
Cause of Action:
Negligence/Failure to Perform
Type of Insured:
Software Developer
Facts:
A software company manufactures and distributes workforce management software that allows third parties to track employee hours, overtime, vacation time, and compiles information for payroll processing. The company enters into an agreement to provide the software to a customer, including implementation, installation, customization, training, and support services.
Situation:
Six months after installation, the customer is dissatisfied with the performance of the software, specifically citing a functionality failure. The customer grants the software company a six-week period to rectify the issue.
Challenge:
The software company fails to resolve the issues within the allotted time. Consequently, the customer terminates the contract, alleging negligence and failure of the product to perform as intended. The damages claimed exceed $700,000.
Resolution:
- Claim Expenses: $50,000
- Indemnity: Settled for $250,000
Analysis:
This case underscores the importance of meeting performance expectations and contractual obligations. The failure to rectify software issues promptly led to significant financial repercussions. The E&O insurance provided critical support in covering the claim expenses and settlement costs.
For software developers, having robust E&O insurance is essential to protect against potential lawsuits and financial losses arising from service or product failures.
Conclusion:
Ensure your software business is safeguarded against unforeseen challenges and potential claims. Explore our specialized insurance solutions to protect your operations and reputation. Learn more about how we can help here.