diff --git a/.claude/commands/add-new-service.md b/.claude/commands/add-new-service.md
index 86b1768..afb125e 100644
--- a/.claude/commands/add-new-service.md
+++ b/.claude/commands/add-new-service.md
@@ -98,7 +98,7 @@ DATABASES=(
     "lightrag"
     "postiz"
     "waha"
-    "$ARGUMENTS"  # Add your service here
+    "new_data_base_name"  # Add your service here
 )
 ```
 
@@ -114,10 +114,10 @@ This script:
 Example in docker-compose.yml:
 ```yaml
 environment:
-  DATABASE_URL: postgresql://postgres:${POSTGRES_PASSWORD}@postgres:5432/$ARGUMENTS
+  DATABASE_URL: postgresql://postgres:${POSTGRES_PASSWORD}@postgres:5432/new_data_base_name
   # OR individual vars:
   POSTGRES_HOST: postgres
-  POSTGRES_DATABASE: $ARGUMENTS
+  POSTGRES_DATABASE: new_data_base_name
 ```
 
 ### 1.6 Proxy Configuration (for outbound AI API calls)
@@ -563,14 +563,14 @@ Add to `SERVICE_METADATA` object (~line 145):
 
 ### Categories
 
-| Category | Description | Examples |
-|----------|-------------|----------|
-| `ai` | AI/ML services | Flowise, LangChain, Ollama, LightRAG |
-| `database` | Data storage | PostgreSQL, Qdrant, Weaviate, Neo4j |
-| `monitoring` | Observability | Prometheus, Grafana, Langfuse |
-| `tools` | Utilities | Gotenberg, Docling, LibreTranslate, PaddleOCR |
-| `infra` | Infrastructure | Caddy, Redis, Gost, Portainer |
-| `automation` | Workflow automation | n8n, Postiz |
+| Category     | Description         | Examples                                      |
+| ------------ | ------------------- | --------------------------------------------- |
+| `ai`         | AI/ML services      | Flowise, LangChain, Ollama, LightRAG          |
+| `database`   | Data storage        | PostgreSQL, Qdrant, Weaviate, Neo4j           |
+| `monitoring` | Observability       | Prometheus, Grafana, Langfuse                 |
+| `tools`      | Utilities           | Gotenberg, Docling, LibreTranslate, PaddleOCR |
+| `infra`      | Infrastructure      | Caddy, Redis, Gost, Portainer                 |
+| `automation` | Workflow automation | n8n, Postiz                                   |
 
 ### Color Examples
 
diff --git a/.env.example b/.env.example
index 84a29f0..c4ae2ba 100644
--- a/.env.example
+++ b/.env.example
@@ -4,7 +4,6 @@
 # [optional]
 # Anonymous telemetry - helps improve the project
 # Set to false to disable (default: true)
-# INSTALLATION_ID is auto-generated, do not modify
 ############
 # SCARF_ANALYTICS=false
 
diff --git a/scripts/apply_update.sh b/scripts/apply_update.sh
index 7b47da3..185d0f7 100755
--- a/scripts/apply_update.sh
+++ b/scripts/apply_update.sh
@@ -21,6 +21,9 @@ set -e
 source "$(dirname "$0")/utils.sh"
 init_paths
 
+# Setup error telemetry trap for tracking failures
+setup_error_telemetry_trap
+
 # Set the compose command explicitly to use docker compose subcommand
 COMPOSE_CMD="docker compose"
 
@@ -35,7 +38,8 @@ cd "$PROJECT_ROOT"
 # Send telemetry: update started
 send_telemetry "update_start"
 
-# --- Call 03_generate_secrets.sh in update mode --- 
+# --- Call 03_generate_secrets.sh in update mode ---
+set_telemetry_stage "update_env"
 log_info "Ensuring .env file is up-to-date with all variables..."
 bash "$SCRIPT_DIR/03_generate_secrets.sh" --update || {
     log_error "Failed to update .env configuration via 03_generate_secrets.sh. Update process cannot continue."
@@ -44,7 +48,8 @@ bash "$SCRIPT_DIR/03_generate_secrets.sh" --update || {
 log_success ".env file updated successfully."
 # --- End of .env update by 03_generate_secrets.sh ---
 
-# --- Run Service Selection Wizard FIRST to get updated profiles --- 
+# --- Run Service Selection Wizard FIRST to get updated profiles ---
+set_telemetry_stage "update_wizard"
 log_info "Running Service Selection Wizard to update service choices..."
 bash "$SCRIPT_DIR/04_wizard.sh" || {
     log_error "Service Selection Wizard failed. Update process cannot continue."
@@ -54,6 +59,7 @@ log_success "Service selection updated."
 # --- End of Service Selection Wizard ---
 
 # --- Configure Services (prompts and .env updates) ---
+set_telemetry_stage "update_configure"
 log_info "Configuring services (.env updates for optional inputs)..."
 bash "$SCRIPT_DIR/05_configure_services.sh" || {
     log_error "Configure Services failed. Update process cannot continue."
@@ -65,6 +71,7 @@ log_success "Service configuration completed."
 cleanup_legacy_n8n_workers
 
 # Pull latest versions of selected containers based on updated .env
+set_telemetry_stage "update_docker_pull"
 log_info "Pulling latest versions of selected containers..."
 COMPOSE_FILES_FOR_PULL=("-f" "$PROJECT_ROOT/docker-compose.yml")
 
@@ -96,6 +103,7 @@ $COMPOSE_CMD -p "localai" "${COMPOSE_FILES_FOR_PULL[@]}" pull --ignore-buildable
 }
 
 # Start PostgreSQL first to initialize databases before other services
+set_telemetry_stage "update_db_init"
 log_info "Starting PostgreSQL..."
 $COMPOSE_CMD -p "localai" up -d postgres || { log_error "Failed to start PostgreSQL"; exit 1; }
 
@@ -104,12 +112,14 @@ $COMPOSE_CMD -p "localai" up -d postgres || { log_error "Failed to start Postgre
 bash "$SCRIPT_DIR/init_databases.sh" || { log_warning "Database initialization had issues, but continuing..."; }
 
 # Start all services using the 06_run_services.sh script (postgres is already running)
+set_telemetry_stage "update_services_start"
 log_info "Running Services..."
 bash "$RUN_SERVICES_SCRIPT" || { log_error "Failed to start services. Check logs for details."; exit 1; }
 
 log_success "Update application completed successfully!"
 
 # --- Fix file permissions ---
+set_telemetry_stage "update_fix_perms"
 log_info "Fixing file permissions..."
 bash "$SCRIPT_DIR/08_fix_permissions.sh" || {
     log_warning "Failed to fix file permissions. This does not affect the update."
@@ -117,6 +127,7 @@ bash "$SCRIPT_DIR/08_fix_permissions.sh" || {
 # --- End of Fix permissions ---
 
 # --- Display Final Report with Credentials ---
+set_telemetry_stage "update_final_report"
 bash "$SCRIPT_DIR/07_final_report.sh" || {
     log_warning "Failed to display the final report. This does not affect the update."
     # We don't exit 1 here as the update itself was successful.
diff --git a/scripts/install.sh b/scripts/install.sh
index 88d76d6..cf87c00 100755
--- a/scripts/install.sh
+++ b/scripts/install.sh
@@ -47,6 +47,9 @@ fi
 # Initialize paths using utils.sh helper
 init_paths
 
+# Setup error telemetry trap for tracking failures
+setup_error_telemetry_trap
+
 # Generate installation ID for telemetry correlation (before .env exists)
 # This ID will be saved to .env by 03_generate_secrets.sh
 INSTALLATION_ID=$(get_installation_id)
@@ -108,26 +111,32 @@ fi
 # Run installation steps sequentially using their full paths
 
 show_step 1 8 "System Preparation"
+set_telemetry_stage "system_prep"
 bash "$SCRIPT_DIR/01_system_preparation.sh" || { log_error "System Preparation failed"; exit 1; }
 log_success "System preparation complete!"
 
 show_step 2 8 "Installing Docker"
+set_telemetry_stage "docker_install"
 bash "$SCRIPT_DIR/02_install_docker.sh" || { log_error "Docker Installation failed"; exit 1; }
 log_success "Docker installation complete!"
 
 show_step 3 8 "Generating Secrets and Configuration"
+set_telemetry_stage "secrets_gen"
 bash "$SCRIPT_DIR/03_generate_secrets.sh" || { log_error "Secret/Config Generation failed"; exit 1; }
 log_success "Secret/Config Generation complete!"
 
 show_step 4 8 "Running Service Selection Wizard"
+set_telemetry_stage "wizard"
 bash "$SCRIPT_DIR/04_wizard.sh" || { log_error "Service Selection Wizard failed"; exit 1; }
 log_success "Service Selection Wizard complete!"
 
 show_step 5 8 "Configure Services"
+set_telemetry_stage "configure"
 bash "$SCRIPT_DIR/05_configure_services.sh" || { log_error "Configure Services failed"; exit 1; }
 log_success "Configure Services complete!"
 
 show_step 6 8 "Running Services"
+set_telemetry_stage "db_init"
 # Start PostgreSQL first to initialize databases before other services
 log_info "Starting PostgreSQL..."
 docker compose -p localai up -d postgres || { log_error "Failed to start PostgreSQL"; exit 1; }
@@ -137,10 +146,12 @@ docker compose -p localai up -d postgres || { log_error "Failed to start Postgre
 bash "$SCRIPT_DIR/init_databases.sh" || { log_warning "Database initialization had issues, but continuing..."; }
 
 # Now start all services (postgres is already running)
+set_telemetry_stage "services_start"
 bash "$SCRIPT_DIR/06_run_services.sh" || { log_error "Running Services failed"; exit 1; }
 log_success "Running Services complete!"
 
 show_step 7 8 "Generating Final Report"
+set_telemetry_stage "final_report"
 # --- Installation Summary ---
 log_info "Installation Summary:"
 echo -e "  ${GREEN}*${NC} System updated and basic utilities installed"
@@ -155,6 +166,7 @@ bash "$SCRIPT_DIR/07_final_report.sh" || { log_error "Final Report Generation fa
 log_success "Final Report generated!"
 
 show_step 8 8 "Fixing File Permissions"
+set_telemetry_stage "fix_perms"
 bash "$SCRIPT_DIR/08_fix_permissions.sh" || { log_error "Fix Permissions failed"; exit 1; }
 log_success "File permissions fixed!"
 
diff --git a/scripts/update.sh b/scripts/update.sh
index 2664a26..c02a21b 100755
--- a/scripts/update.sh
+++ b/scripts/update.sh
@@ -24,6 +24,9 @@ set -e
 source "$(dirname "$0")/utils.sh"
 init_paths
 
+# Setup error telemetry trap for tracking failures
+setup_error_telemetry_trap
+
 # Global variable to track backup path for cleanup
 BACKUP_PATH=""
 
@@ -49,6 +52,7 @@ fi
 
 
 log_info "Starting update process..."
+set_telemetry_stage "git_update"
 
 # Pull the latest repository changes
 log_info "Pulling latest repository changes..."
@@ -105,6 +109,7 @@ else
 fi
 
 # Update Ubuntu packages before running apply_update
+set_telemetry_stage "git_system_packages"
 log_info "Updating system packages..."
 if command -v apt-get &> /dev/null; then
     sudo apt-get update && sudo apt-get upgrade -y
@@ -115,6 +120,7 @@ fi
 
 
 # Execute the rest of the update process using the (potentially updated) apply_update.sh
+# Note: apply_update.sh has its own error telemetry trap and stages
 bash "$APPLY_UPDATE_SCRIPT"
 
 exit 0
\ No newline at end of file
diff --git a/scripts/utils.sh b/scripts/utils.sh
index 34494cd..f0fca47 100755
--- a/scripts/utils.sh
+++ b/scripts/utils.sh
@@ -913,3 +913,70 @@ send_telemetry() {
     # Send telemetry in background with short timeout (non-blocking, silent)
     curl -sf --connect-timeout 2 --max-time 2 "$url" >/dev/null 2>&1 &
 }
+
+#=============================================================================
+# ERROR TELEMETRY
+#=============================================================================
+# Tracks installation/update failures with stage and exit code.
+# Uses same opt-out as regular telemetry (SCARF_ANALYTICS=false or DO_NOT_TRACK=1)
+
+# Set current telemetry stage for error tracking
+# Usage: set_telemetry_stage "system_prep"
+set_telemetry_stage() {
+    export TELEMETRY_STAGE="$1"
+}
+
+# Send error telemetry event (called by trap handler)
+# Usage: send_error_telemetry 1
+# Arguments:
+#   $1 - exit_code: The exit code that triggered the error
+send_error_telemetry() {
+    local exit_code="${1:-1}"
+    local stage="${TELEMETRY_STAGE:-unknown}"
+
+    # Prevent duplicate sends
+    [[ "${TELEMETRY_ERROR_SENT:-0}" == "1" ]] && return 0
+    export TELEMETRY_ERROR_SENT=1
+
+    # Load environment (for SCARF_ANALYTICS check)
+    [[ -f "$ENV_FILE" ]] && source "$ENV_FILE" 2>/dev/null
+
+    # Opt-out check: respect SCARF_ANALYTICS and DO_NOT_TRACK
+    [[ "${SCARF_ANALYTICS:-true}" == "false" || "${DO_NOT_TRACK:-0}" == "1" ]] && return 0
+
+    # Determine event type based on stage prefix
+    local event_type="install_error"
+    [[ "$stage" == update_* || "$stage" == git_* ]] && event_type="update_error"
+
+    # Get installation ID and OS
+    local install_id
+    install_id=$(get_installation_id)
+    local os_type
+    os_type=$(get_os_type)
+
+    # Get version from VERSION file
+    local version="unknown"
+    [[ -f "$PROJECT_ROOT/VERSION" ]] && version=$(cat "$PROJECT_ROOT/VERSION" | tr -d '\n\r')
+
+    # Build URL with error-specific parameters
+    local url="${SCARF_ENDPOINT}?event=${event_type}&version=${version}&id=${install_id}&os=${os_type}&stage=${stage}&exit_code=${exit_code}"
+
+    # Send telemetry in background with short timeout (non-blocking, silent)
+    curl -sf --connect-timeout 2 --max-time 2 "$url" >/dev/null 2>&1 &
+}
+
+# Internal trap handler for ERR signal
+_telemetry_error_handler() {
+    local exit_code=$?
+    # Only send if we actually have an error (exit_code > 0)
+    [[ $exit_code -gt 0 ]] && send_error_telemetry "$exit_code"
+    # Re-exit with the original code (important for set -e behavior)
+    exit $exit_code
+}
+
+# Setup global ERR trap for error telemetry
+# Usage: setup_error_telemetry_trap
+# Note: Only call this in top-level orchestrator scripts (install.sh, apply_update.sh, update.sh)
+setup_error_telemetry_trap() {
+    trap '_telemetry_error_handler' ERR
+}