Software Developer Insurance
Compare business insurance for software developers and tech companies
Business insurance for software developers
Software company insurance is a flexible package policy, that can incorporate a variety of liability and property coverages that can be tailored to meet the needs of the business. Working at the forefront of digital innovation means your business is exposed to a unique set of risks and challenges. To safeguard your business, insurance for software developers becomes an indispensable asset. With varied business models it's important to accurate describe the services you provide your clients to ensure your policies are valid.
Liability insurance for the technology sector
Working with our pannel of insurers, we can accommodate: SaaS providers, hardware providers, technology businesses, IT contractors, managed service providers, and other companies working within the tech sector. Software developers invest significant resources in developing cutting-edge information technology, software applications, and intellectual property. Business insurance can offer protection against intellectual property infringement - in the event of copyright or patent infringement allegations, having coverage can help mitigate legal expenses, potential settlements, and damages, ensuring the continued growth of your software business.
Software developer professional indemnity insurance
Maintaining adequate software developer professional indemnity insurance is necessary when dissatisfied clients are increasingly likely to consider litigation to recover costs and potential damages. The software sector is more prone to litigation because:
Large counterparties - The UK software development sector is made up of predominantly small and medium sized companies. If disputes arise, software businesses can find themselves defending legal actions against companies with significant financial resources.
Package software engineer insurance for small and medium sized businesses
A combined professional indemnity policy for software engineers can mitigate the risks of unforeseen consequences. Legal disputes can be very costly to defend, but a tailored business insurance policy can offer financial protection when you need it most. Technology companies are exposed to a number of risks that can be insured against:
Breach of contract
Customers are often reliant upon your services, therefore the industry is prone to risks of litigation if the client claims you have failed to deliver under contract.
Cyber-attacks
Including the resulting data breach for any hosted services means you can be held accountable for loss of sensitive or confidential information on behalf of your clients.
Copyright infringement
It can be difficult to avoid copyright and intellectual property infringement in a competitive market when hiring staff and growing the business to meet demand.
Looking for a software engineer insurance policy? Discuss your requirements with a specialist software insurance broker
Software developer coverage can start at £336 per year or £28 per monthAbout software developer business insurance
Professional indemnity
Otherwise known as professional liability or E&O, professional indemnity provides cover against legal disputes, damages and settlements when offering a service, advice, design or specification to your clients. As a specialist in your subject matter, clients rely on your skill, knowledge and due diligence. The cover will typically provide for breach of contract, negligence, defamation, and intellectual property infringement. It's important to ensure the definition of professional service on the policy schedule covers your business activities. Associations with financial services, manufacturing, healthcare, or medical devices will need to be disclosed appropriately, or you could find yourself without cover.
Cyber coverage
Should be considered in conjunction with professional indemnity, given that a claim could be covered by both policies for a company which provides a technology professional service. For example, negligence on behalf of a managed service provider or software developer could mean that one of your clients is impacted by a data breach. Traditionally, both policies could respond dependant upon the circumstances. First-party cyber covers your costs and expenses, whereas third-party cyber liability provides for damages and expenses in defending your business against claims.
Employers liability
All employers have a duty of care to provide a safe working environment for their employees. Employers' liability insurance is a compulsory legal requirement for any business that has employees, and will offer financial protection against compensation claims arising from injury or illness at work. Most policies will extend to contractors, as long as you are their only employer. The protection will cover compensation payments awarded by the courts may include payments for medical bills, lost income from working, and their legal fees. To add £10 million employers liability for a software developer, for one employee can cost as little as £60 annually.
Product liability
Do you manufacture any hardware? Do you provide a tangible product, other than printed material, software, hardware, or peripheral equipment to be used by computer or printed material? If so, insurers will need to understand what products you manufacture or supply. Product liability provides financial protection for businesses against liable claims arising from injury or property damage as a result of a fault with a good you have provided. Cover should be provided on a combined basis with your professional indemnity because it's hard to distinguish between a failure of the service or hardware. If you had two separate insurers for the two covers, you can find yourself in a position whereby claims payments are fought over. Products that will be used in aviation or space will require special consideration from dedicated underwriters.
Directors and officers
Founders of software based startups will often take risks in order for to be successful, unfortunately this can lead to disputes with regulators, shareholders, customers, competitors, employees, and suppliers. Otherwise known as management liability, or D&O cover, directors and officers liability provides cover against civil, criminal, and regulatory proceedings to individuals whilst acting in a managerial capacity on behalf of a company. If you raise money, it can be a common request by investors to buy the cover. For companies without a positive net worth or profit in their last reporting period, insurers will need to review your management accounts, or is you are a startup a monthly cash flow forecast for the first 12 months and a pitch deck or business plan. Otherwise, they will apply an insolvency exclusion which will removes a significant amount of D&O cover for stakeholder claims if the business fails.
Equipment coverage
Computers and IT systems are an integral part of the business world. Specific equipment cover designed for software providers means greater flexibility to where your equipment is insured. Whether, that's at your home, in the office, away from the office, or in a third parties data centre. We appreciate that software companies which offer infrastructure may require high limits of cover to protect their severs and computer equipment. It is vital to protect your company’s devices, servers, IT systems and software. The covers available from specialist insurers in the market can offer robust protection to safeguard your operations against damage to computers and data loss.
Controls to secure competitive software developer insurance
Contract management
Using standard written contracts, having them reviewed by a legal qualified individual, providing your services to a written specification, excluding liability for consequential or indirect losses (meaning any loss which does not arises naturally from a breach and is not foreseeable by both parties) are recommended controls for any technology and software businesses.
Security controls
Regular backups of critical data to a 'cold' or 'offline' location, multi-factor authentication (MFA) for all access to your critical services accessible from the internet, not allowing remote access to privileged accounts without a virtual private network (VPN), and regular cyber security awareness training, including anti-phishing, to all individuals who have access to your company's network.
How much does software developer insurance cost?
Software developer insurance can start at £425 per year or £36 per month. This would typically include, £1 million professional indemnity, £1 million public liability, and £10 million employers' liability. However, the above will pricing will be dependent upon the size of the business - up to £150,000 turnover or projected turnover for the first year.
Important insurer rating factors when calculating your premium:
- Turnover
- Services provided
- Average size of contract
- Largest contract size
- Contractual risk management
- Cyber risk controls
- Amount of personally identifiable information
- Sensitive nature of data held or processed
Premiums will increase with the size of the business and risk associated with the business activities. Depending upon your services, your clients, and the size of your contracts. It is typically recommend that once your turnover reaches £2 million, we'll ask you to complete a proposal form, as opposed to agreeing to a statement of fact.
For companies with revenues are in the millions of pounds, it is not unusual for your premiums to be in excess of £10,000. If your business holds and processes millions of personal identifiable information (PII) records, or the information is deemed sensitive by nature, this can mean a high exposure to insurers and your premiums can increase significantly.
Industry specific guides for software developer insurance
It's important to highlight that some industries combined with new technology will require specialist cover to guard against the risks that companies will face. For example, managed service providers have a higher exposure to cyber liability and business interruption risks. Whereas, consultant engineers carry a different risk exposure and will require a different package.
Looking for software developer liability insurance? Talk with one of our experts about your needs
Software company professional indemnity insurance can start at £336 per year or £28 per monthMore information about software developer liability insurance
At 'Get Indemnity' we work with the leading software developer insurers:
Frequently asked questions
Can infringement of intellectual property rights be covered?
Professional indemnity will commonly cover allegations of infringing upon intellectual property rights. However, you may want to consider a standalone intellectual property insurance policy allows you defend your business against claims you have infringed someone's intellectual property and more importantly pursue those who have infringed upon your intellectual property.
What are the high-risk software development activities?
- Cryptocurrencies
- Electronic Wallets
- FCA Regulated Business
- Health Data Software
- Mission Critical Software
- Point of Sale (POS) System
- Process Control Software
- Reward Card Providers
- Safety Automotive Systems
- Trade Execution Software
What are the low-to-medium risk software development activities?
- Agile Software development
- Application Development
- Computer Programming
- Feasibility Studies
- Implementation
- Integration Testing
- Project Management
- Software Testing
- Software Deployment
- Systems Design
- Trainning
- Risk Management
- UI Design
- UX Design
- Web Development
Do software developers need professional indemnity insurance?
Professional indemnity insurance is generally recognised to be the most important policy cover that a software developer can purchase. Software developer professional indemnity will provide financial protection against negligence, mistakes, errors, omissions, breach of contract, defamation and other civil liabilities. Also known as technology E&O insurance in North America.
How much software developer PI insurance should we buy?
For small businesses, the most commonly purchased amount of cover is £1 million. However, it's common for counterparties to request higher amounts (i.e £5 million) under contract, especially when dealing with large corporates. It's also worth considering that defending a liability insurance allegation can typically amount to half the total cost of the claim.
Can you assist with financial technology insurance?
We work with the leading FinTech insurance companies to identify covers such as, professional indemnity (E&O), directors and officers, cyber insurance, crime insurance, and office insurance. Please give us a call on 0345 625 0711 to dicuss your needs.
Can you assist with media technology insurance?
We work with a number of insurers that can underwrite technology and media liability insurance risks. Many media businesses are employing software platforms to distribute their content. Ensure your policies are adequate to meet your needs by arranging a call back.
When should you buy insurance as a software developer?
Some technology and software companies will wait until they are required under contract to purchase the relevant policy covers. If you are seeking to provide your technology or software services to larger corporates, this will certainly be the case. Even small and medium sized business are increasingly seeking to obtain insurance certificates before engaging. The insurance covers discussed above should be considered at an early stage. Insurance premiums can vary significantly depending upon your business activities and the information that your hold or process. There are benefits to discussing your company with an insurance broker early, so you appreciate what policy covers are available and the next steps.
Can you provide some example software developer insurance claims?
The below guide identifies some scenarios you may face and the available insurance for software companies that can offer financial protection. Obviously the below is a limited number of examples and the policies can cover a wide and varied number of circumstances.
Professional indemnity claim examples:
- A client alleges an infringement of intellectual property rights when a similar software solution is developed for a competitor.
- A client seeks compensation for a system upgrade that contained an inadequate component that crashed their network for 48-hours.
- A client claims for damages alleging a breach of contract for failing to deliver on a software project.
Directors and officers insurance claim examples:
- The Information Commissioner's Office (ICO) investigates and prosecutes your directors for a data protection breach.
- An allegation of unfair dismissal and workplace harassment is made against one of the directors.
- Shareholders bring an legal action against a director for conflicts of interests.
Cyber insurance claim examples:
- A cyber-attack and resulting data breach means customer information stolen and you are required to notify thousands of individuals.
- A malicious virus means that you are unable to provide your hosted services until you meet a ransomware demand.
- Computer security failed to prevent unauthorised access and the transmission of malicious code to a third-party.
Do we need public liability insurance if we work from home?
Otherwise known as general liability insurance, will protect against claims arising from injury or property damage of persons other than your employees. Most businesses will have some level of interaction, either by you visting their premises or them visting your premises. If you work from and don't interect in person you have a very limited exposure. However, it is usually recommend that all businesses buy public liability insurance in csase they do and an accident occurs. For £80 annually, it's not worth taking the risk of not having the cover in force.
Related articles and guides
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