I wrote a Lambda script that was supposed to trigger once a day. Instead, I created an infinite loop. I went away for the weekend and came back to an AWS bill for $50,000 in compute charges. The client refuses to pay Amazon. Amazon is threatening collections. The client says, “You broke it, you bought it.”
Key Takeaways
- E&O covers “Damages,” not “Bills”: This is a grey area. If the client pays the bill and sues you for “damages,” E&O typically covers it. If you just want insurance to pay Amazon directly? No.
- Contractual Liability: If you contractually agreed to manage the budget, this is a breach of contract.
- “Voluntary Payments”: Do NOT pay the bill yourself and ask for reimbursement. That voids coverage.
- Negligence: The infinite loop is a coding error (negligence). This is insurable.
The “Why”: The Financial Loss vs. Property Damage
The Trap: General Liability covers property damage. A high server bill is not property damage; it is Pure Financial Loss.
Standard PL policies cover financial loss caused by negligence.
However, some policies have exclusions for “Over-redemption” or “Cost guarantees.” If you promised the client “hosting under $500,” insurance won’t pay the difference. If you negligently caused a spike, they should.
The Investigation: I Quoted 3 Major Carriers
1. Coalition
- My Analysis: I asked a broker specifically about “Runaway Cloud Bills.” Coalition’s stance is usually that if the bill is a “damage” sustained by the client due to your error, it is covered.
2. The Hartford
- My Analysis: They are more traditional. They might fight this as a “business debt” rather than a liability claim. You need a strong argument that the code was “defective.”
3. Travelers
- My Analysis: Their Tech policy is broad. They cover “errors in coding.” An infinite loop is a coding error.
[IMAGE: Screenshot of an AWS billing dashboard with a vertical spike]
Comparison Table: Cloud Bill Liability
| Carrier | Covers Cloud Spikes? | Condition | Deductible | Best For… |
| Coalition | Likely | Must be “Negligence” | | DevOps |
| Travelers | Likely | Coding Error | | Developers |
| Hartford | Unclear | Case-by-case | | General IT |
Step-by-Step Action Plan
- Call AWS Support: Sometimes, for a first-time error, AWS will forgive the bill (“One-time courtesy credit”). Try this first!
- Fix the Code: Stop the bleeding.
- Notify Carrier: If AWS refuses to waive the fee, report the claim.
- Do Not Admit Liability: Say “We are investigating a configuration anomaly.”
FAQ
Does Amazon require insurance?
No, but your client contracts usually do.
Is this “Cyber” insurance?
No. It wasn’t a hack. It was a coding error (E&O).
Can I get “Cloud Overrun Insurance”?
There are niche products for this, but standard E&O is your best bet for negligence-based spikes.