What Is Errors and Omissions Insurance for a Medical Device Company?

Errors and omissions insurance, often written as E&O, covers a medical device company for claims that a service or professional duty it performed was done negligently. It is the counterpart to products liability, which answers when the physical device is alleged to have caused injury. A device company can need both, because it sells a product and, increasingly, performs services around that product. Founders often confuse this with clinician cover, so it helps to separate malpractice from a device company’s professional liability.

Errors and Omissions Versus Products Liability

The two policies answer different questions. Products liability responds to bodily injury or property damage caused by the device itself, through a design defect, a manufacturing defect, or a failure to warn. Errors and omissions responds to harm caused by how the company performed a professional service. If a technician calibrates a device incorrectly, if a training program leaves a clinician misinformed, or if a monitoring service misreads a result and fails to pass it along, the loss flows from the service rather than from a defect in the hardware. A products policy was not built for that, and a general liability policy reaches neither exposure. The distinction matters at claim time, because a plaintiff and two insurers will argue over which policy owns the loss, and the answer turns on whether the failure was in the thing or in the service.

When a Device Company Actually Needs E&O

A pure hardware manufacturer with no service component leans mostly on products liability. The need for E&O grows with everything the company does beyond shipping a device. Installation, calibration, and field service create professional exposure. Training and clinical support create it. Most of all, software creates it. When a device includes software, or when the product is software regulated as a medical device, the company is performing a professional function in code, and a technology errors and omissions form is what responds to an error in that function. Connected devices that collect, transmit, or act on data sit firmly in this category, and that is where most device companies are heading. A device that started as standalone hardware often becomes a connected system within a few product cycles, and the professional exposure arrives with the first software update rather than waiting for a redesign.

Where E&O and Products Liability Overlap and Gap

The hard part is the seam between the two. A connected device that misreports a reading raises a question both policies might push toward the other: was the harm a product defect or a service error. The overlap between Tech E&O and products liability is exactly where coverage gaps form, because each policy can be written to assume the other responds first. A device company with both a hardware and a software exposure needs the two programs coordinated, with the wording checked so a claim does not fall into the space between them. A standalone products liability program handles the device, while E&O handles the service and the software, and the two only work if they are built to meet in the middle.

What to Put in Place

Start by listing what the company does beyond manufacturing. If the answer includes software, installation, calibration, training, monitoring, or data handling, E&O belongs in the program alongside products liability rather than as an afterthought. Match the form to the actual service, confirm the two policies are coordinated at the seam, and revisit the structure as the product adds connected or software features, because that is what pulls more of the exposure into E&O over time. It also helps to confirm the E&O limit reflects the scale of the customers relying on the service, since a single hospital system or distributor can concentrate far more exposure than the company’s own size would suggest. For companies selling abroad, confirm the coverage footprint matches the sales footprint, since the EU MDR changes what a US device company’s program must cover. Because E&O is usually claims-made, ending it without tail leaves a gap, covered in what tail coverage means for a device company.

Before your next renewal, map each service the company performs to the policy that would respond if it failed. A specialty review through Tower Street Insurance can confirm the E&O and products programs line up without a gap between them.