In the daily work of developers, IT consultants, and freelancers operating in the tech world, every line of code, every network configuration, and every architectural decision can have a direct impact on clients' businesses. A bug in a management system, an error in a cloud migration, or a poorly configured backup can turn into production downtime, data breaches, penalties, and potentially significant compensation claims. For this reason, beyond technical skills, professional risk management and the evaluation of specific professional liability coverage for IT (Tech E&O) becomes central.

Errors in software development and digital platforms

IT consultants bear primary responsibility for requirements analysis, design, coding, exhaustive testing, and the delivery of reliable software. One of the most frequent risks for custom developers lies precisely in errors during these phases: a bug can generate data loss or operational downtime.

A management system delivered with bugs can, for example, cause the loss of important data or the generation of incorrect invoices for dozens of clients, resulting in tax penalties and reimbursement claims against the company using it… and, in turn, against the freelance developer who developed it.

Or an error in the code of an e-commerce platform that blocks purchases for days can mean a lost sales season, as in the case of a delayed release relative to a holiday period or a malfunction that prevents users from completing their order.

In these scenarios, the client may claim to have suffered a "pure financial loss" (lost revenue, extra costs, penalties) directly attributable to the work of the professional.

Data breaches, ransomware and backup management

The management of data and infrastructure exposes IT freelancers to critical risks related to cybersecurity and operational continuity. The professional must ensure secure firewall/VPN configurations, periodically tested backups, and vulnerability mitigation, with effective recovery plans.

An incorrectly configured firewall or an unpatched vulnerability, for example, can open the door to a hacker attack, resulting in the theft of sensitive data and possible sanctions from the Privacy Authority, which the client may attempt to recover from the consultant responsible for security.

A backup system that has not been tested or has been poorly configured may instead prove useless precisely when needed: following a ransomware attack or a system crash, the client discovers that critical data cannot be recovered and seeks compensation for the loss of information and the disruption of services.

Human errors also fall within the scope of risk: a technician who accidentally deletes data without an up-to-date backup, or who takes too long to restore systems following a failure or a fire at the data center premises, may be held liable for the economic and reputational damages suffered by the client.

Privacy, GDPR and unlawful data processing

The IT consultant verifies and implements GDPR requirements (consents, encryption, logging, data minimisation) in software and infrastructures that process personal data. Many tech projects directly impact data processing, especially on platforms that collect or process end-user information.

Software that does not comply with GDPR requirements (for example regarding consent management, logging, or data minimisation) can expose the client to administrative sanctions, which could be attributed to an incorrect assessment or non-compliant implementation by the professional.

A data breach caused by unresolved vulnerabilities or inadequate security measures can generate compensation claims from affected individuals and sanctions from the authority, with the risk that the client may involve developers, security consultants, or infrastructure maintainers in legal proceedings.

In all these cases, it is not only a matter of "lost" data, but also of reputational and image damage that can have a measurable economic impact.

Intellectual property, copyright and the use of generative AI

In software development, the freelancer monitors open source licences, libraries, and AI assets, avoiding copyright violations for client use. In the modern tech ecosystem with proprietary code and GenAI, the risks related to intellectual property are significant.

The inclusion in software of open source components that do not comply with their respective licences can, for example, lead to disputes over copyright infringement, with demands for compliance, removal, or compensation from rights holders.

The use of AI-generated images or graphics that are too similar to existing works can instead lead to disputes over the violation of image rights or trademarks, especially if used in the client's external or commercial materials.

Although these errors are often unintentional, liability may nonetheless be attributed to the professional, who risks having to bear significant legal and compensation costs.

Consulting errors, contracts and misaligned expectations

The IT professional provides accurate risk analyses (cloud migration, architectures, budget), defines clear SLAs, and meets contractual deadlines. The freelance worker's role is not solely hands-on but also includes strategic advisory and the management of complex projects.

Incorrect advice on a cloud migration, security requirements, or the most suitable architecture can lead the client to make wrong choices, resulting in service interruptions, extra costs, and delays in go-live. In these cases, the dispute concerns the quality of the consultancy itself, not just the technical implementation.

Delays in the release of platforms, updates, or promised services can also compromise launch campaigns or key commercial periods, with claims for damages due to lost revenues or penalties applied to end clients.

Many disputes arise from unclear contracts, vague SLAs, or misaligned expectations regarding results, performance, and timelines: aspects that a freelancer should attend to just as carefully as the quality of the code.

Why Professional Liability Insurance is strategic for tech freelancers

Faced with this mix of risks – technical, legal, economic, and reputational – a professional liability insurance policy specific to IT is a key protection tool.

• It generally covers financial damages caused to third parties by errors, omissions, or negligence in the course of professional activities: software bugs, incorrect configurations, service interruptions, data loss or breaches, consulting errors, and unintentional violations of intellectual property rights.
• It may include legal expenses for defending against compensation claims, retroactive cover for activities carried out in the past, and, in some solutions, additional guarantees related to cyber incidents or the management of data within one's own practice.

A Freelance Liability Insurance policy designed for IT consultants offers fundamental protection against compensation claims for unintentional errors, omissions, or negligence in software development, infrastructure management, and data security. For clients, it means working with a financially solvent professional, capable of meeting any damages economically; for the consultant, it means being able to take on complex projects without putting their personal assets or the future of their business at risk.

In this area too, digitalisation plays a key role: today insurance companies and intermediaries use online platforms and data-driven tools to offer highly personalised coverage, built around the specific needs of freelancers and tech micro-businesses.

It is in this context that the partnership between Odda and Lokky sits, a digital insurance broker specialising in Small Businesses, Professionals, and Freelancers, which allows IT consultants to access 100% digital, tailor-made policies for their business.