Software Development Insurance
Software developers need protection against lawsuits, property damage, professional errors, and more.
Written by
Christine Lacagnina has written thousands of insurance-based articles for TrustedChoice.com by authoring consumable, understandable content.
Reviewed by
Paul Martin is the Director of Education and Development for Myron Steves, one of the largest, most respected insurance wholesalers in the southern U.S.
Whether you're a large-scale custom software developer or an independent website developer, your business is exposed to numerous risks on a daily basis when you interact with clients and the general public. Software developers need tailored business insurance solutions to protect their businesses from possible financial fallout after an accident, fire, or lawsuit.
Luckily, an independent insurance agent can easily help you find the right software developer insurance. They'll get you matched to the policy that covers your unique risks. But for starters, here's a breakdown of the necessary insurance for software companies.
The Most Common Risks in the Software Development Industry
Every industry comes with its own set of risks. Some of the most common risks faced by professionals and businesses in the software development industry are:
- Disgruntled customers
- Trademark or copyright infringement
- Property damage caused by you or your employees
- Workplace accidents and injuries
- Injuries to customers on the business premises
- Theft or vandalism
- Weather events, fires, and other property damage
Understanding your industry's unique common risks is key for honing in on your specific coverage needs.
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Computer Programmer and Software Developer Insurance
Whatever unique services you specialize in as a computer programmer, you need business insurance to protect you from the risks you're exposed to in your day-to-day business operations. Talk to your independent insurance agent about the following types of computer programmer insurance or insurance software development professionals may need:
- Commercial general liability insurance: This protects your business against third-party claims of personal property damage or bodily injury.
- Commercial property insurance: This covers your business's physical structures, like an office building, and the equipment and inventory inside against perils like fire damage, vandalism, and more.
- Business income insurance: This covers continued income and payroll during temporary closures due to incidents like fire damage and more.
Your independent insurance agent can help you determine if you can save money on your computer programmer insurance or software developer insurance by comparing available discounts you might qualify for.
Professional Liability Coverage for Software Companies and Web Developers
Your software company insurance also must include a special form of liability protection known as professional liability insurance or errors and omissions coverage. This coverage can reimburse your business for lawsuit costs if a third party sues you for claims of professional errors, such as improperly completing a contracted service.
For example, if your business sold software to a customer who installed a virus on their computer that led to personal information getting stolen, you could end up with a lawsuit on your hands. Professional liability insurance could help reimburse your business for related costs such as attorney, court, and settlement fees.
Your customers expect a certain level of expertise from you, and if you fail to deliver or are somehow negligent, you could easily get sued for resulting damages. Consider the following possible errors that might require this coverage:
- Failing to complete a project on time
- Making coding errors, thus causing a glitch that creates downtime and lost revenue for the client
- Making system design errors
- Causing glitches that expose a client’s system to hackers or causing any error that leads to security vulnerabilities
- Writing programs or applications that don't meet the client’s specifications
Because errors and omissions insurance covers claims that aren't covered by your general liability policy, it's essential protection that no programmer or developer should go without. If you don’t have the right professional indemnity insurance for software developers, your personal assets could be at risk. Ask an independent insurance agent to help you get equipped with this critical protection today.
Is Your Home Office Equipment Covered When You Work from Home?
Insurance for software development might look a little different depending on where the work is completed. If you work out of your home, even just part-time, you may be uninsured or underinsured if you think you have coverage under your homeowners insurance policy.
A typical homeowners insurance policy limits coverage for office equipment to around $2,500, which is often not enough to replace all the equipment you need for programming or web design. Further, home insurance doesn't cover losses related to business liability claims or your business income.
Insurance for software development companies with a home office needs to include the following:
- Home insurance endorsements: Computer programmers, software developers, and web developers can add endorsements to a home insurance policy that provide more coverage for home-based businesses or home offices. This option is viable for businesses without a lot of valuable equipment or business-related visitors. These endorsements typically add about $2,500 in business equipment coverage as well as some additional liability protection at an affordable price.
- In-home business insurance: Some insurance companies offer a special policy for in-home businesses or home offices. The in-home business policy insurance software development companies may need includes certain features of business insurance policies designed for larger firms but sometimes much lower policy limits. A typical in-home business policy provides $10,000 of business property coverage and a liability coverage limit typically between $300,000 and $1 million. It may also provide limited coverage for loss of valuable documents, accounts receivable, off-site business property, and use of equipment.
- Business owners policy (BOP): A BOP is often recommended for home-based business owners who need more than $10,000 of business property coverage as well as liability coverage for customer injuries and business interruption coverage. BOPs offer three essential types of business insurance in one convenient package, including commercial property insurance, business income coverage, and general liability insurance.
Make sure to speak with a local independent insurance agent to ensure your software development insurance policy is truly complete with all the coverages necessary.
Other Coverages to Consider for Software Development Businesses
Computer programmers, software developers, and web designers need to work closely with independent insurance agents to assess their risks and determine their need for other types of coverage. In addition to the policies described above, you may need to consider the following for your business:
- Workers’ compensation insurance: This coverage is required for most businesses that have employees. It protects your employees from the costs of work-related illnesses and injuries by paying for medical expenses and lost wages.
- Employment practices liability insurance: This protects your business if an employee sues you for discriminatory employment practices, harassment, etc.
- Inland marine insurance: This protects computers, equipment, and tools you transport off-site for use at a client’s location. Once your business property leaves your office, it's not covered by your business property policy. Inland marine insurance covers that equipment if it gets stolen or damaged while in transit or stored at another location.
As always, your independent insurance agent can help recommend any types of coverage your software developers insurance policy may be lacking. They'll help you complete your picture of protection in the best way possible.
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Our independent agents shop around to find you the best coverage.
Help from an Independent Insurance Agent Is Just a Click Away
It's easy to get quotes for software development insurance from an independent insurance agent. An independent insurance agent can obtain fast quotes from top-rated, local insurance companies. They'll shop and compare quotes from several different carriers for you, ultimately presenting you with only the results that offer the best blend of coverage and cost.
https://www.iii.org/article/understanding-business-owners-policies-bops#:~:text=Business%20Insurance,-IN%20THIS%20ARTICLE&text=Fire%2C%20burglary%2C%20liability%20and%20business,form%20of%20endorsements%20or%20riders.