Software company insurance
Whether you design websites, develop apps or build corporate ERP systems, unfortunately insurance is just cost of doing business. If you’re a single developer, a small startup or an established software company, the liability risks for software companies is too great to leave your protection up to chance. Writing, updating and testing software requires attention to detail. A single error could mean losses for your clients who may choose to pursue legal action to cover those losses. Software company insurance can cover client losses and the legal costs of answering a statement of claim filed against you, your employees, subcontractors and/or your company – real and unexpected costs your company would have to pay even if the claim is completely frivolous.
Do software companies need insurance?
All companies should have a comprehensive insurance package based on their insurance needs and budget. Insurance protects software companies against the risks they face during business operations. Possible business risks include a customer slip-and-fall accident, a building fire, or an error during your services. Your business could get sued for causing financial damages to the client based on your services, such as a building a faulty software or a data breach. It could also get sued for causing bodily injury or property damage to any client.
Having insurance protects your business from these risks, mitigating the possible financial loss arising from litigation and third-party liability claims. It covers medical bills, legal defence fees, and settlement awards up to your insurance coverage limit. Without insurance protection, pay for damages yourself, which could cause expensive bills, negative cash flow, or even bankruptcy.
What insurance does a software company need?
You should have cyber liability insurance for your business. You have access to confidential business information, customer data, and project requirements. A hacker could steal this information, causing financial and security damages to the organization. Cyber liability insurance covers data breaches, cyber extortion, data restoration, and lost income.
You should also have professional liability insurance. During your software development services, there could be lawsuits or other claims relating to work performance, such as coding errors, poor security considerations, failure to understand project requirements, and accusations of negligence. Professional liability insurance covers legal and settlement expenses related to these claims.
Potential Liability Risks Software Company Insurance Can Protect You From
Software companies face unique risks. Below are some potential liability examples software company insurance was made to address:
- Software/app launch delays that cost a company money in lost revenue
- Errors that cause a client’s system to go offline and lead to losses
- Claims of copyright infringement and/or intellectual property theft by other software companies like the notable Supreme Court case between Oracle and Google
- Software that doesn’t meet a client’s expectations
- System design errors that lead to lost productivity
- Errors that leave a client’s system vulnerable to a breach or to their records being exposed
Remember that a client can claim any of the above and whether it’s true or not, your company would have to pay out-of-pocket to defend itself against that claim. Software company insurance, as stated above, can cover client losses should you make an error or omission and can also cover the costs of legal proceedings including:
- Lawyer’s fees and the costs your company would have to pay to properly defend itself at trial
- Lost revenues your company may face for time spent answering allegations at hearings or court
- Costs to settle a claim against your software company
- Money awarded by the court after a trial has been concluded
Your basic software company insurance should protect your software company from errors you may make but software companies also face other potential losses.
What Type of Insurance do Software Developers Need?
Regardless if you are a software developer at a big company or a startup, you are responsible for building and managing crucial operation systems. Because the systems you develop are vital to the operational abilities and success of the business, errors and client losses can be detrimental and costly.
There are many types of insurance software developers need to protect themselves against liability, legal actions, and damages that can occur on the job.
Comprehensive Software Company Insurance ALIGNED To Protect Your Software Company
Running any type of business means facing risks. Managing those risks is what sets successful businesses apart from the rest. Protecting your software company from devastating losses that could bankrupt your company is the first step to keeping you on-line. Below are other coverages that can be added to your software company insurance and that no software company should be without.
Here are some of the insurances software developers should think about:
Commercial General Liability Insurance is a staple for all commercial enterprises. It protects businesses from legal claims of personal injury, property damage, false advertising, libel/slander and more. If a client is injured while on your property (or you injure them on their property or anywhere else) or if a pedestrian crossing in front of your business slips and falls on ice and injures themselves, your software company could be facing costly litigation. Also, consider opting for liability insurance coverage that is made with your software business in mind.
Cyber Liability & Privacy Insurance for your software company only makes sense. With the amount and type of information stored on your computers and other devices, your software company is a desirable target for cybercriminals. Cyber liability cover in a software company insurance plan can cover the costs of a breach including losses sustained by parties affected by a breach, costs to repair systems and data and notification costs.
Crime Insurance / Fidelity Insurance can protect your software company from the losses your company could face if an employee uses his/her position and access to sensitive information to commit fraud – among other potential losses due to crime.
Property Insurance protects businesses by providing coverage in the event of perils like fires, floods, sewage backups etc. The cost to repair the damage to your building and repair or replace your expensive equipment could end up being more than your software company can handle on its own. And if you run your software company from home, your home insurance policy may not cover your business equipment and other business assets stored at home. Make sure you check your home policy before deciding your home software company can do without commercial property coverage.
Employment Practices Liability (EPL) Insurance covers businesses of all sizes from claims workplace harassment, discrimination, wrongful termination and other employment practices-based suits.
Tech Errors & Omissions Insurance – This is essential for software developers because you rely on technology daily to work. Tech errors & omissions insurance provides coverage for third-party claims for financial harm and other damages caused by the software developing service and solutions you provide.
What Does Technology Professional Liability Insurance Cover?
Technology professional insurance, also known as tech errors & omissions insurance, protects you from risks resulting from the technology services and solutions you provide. This includes third-party claims of damages or financial losses because you did not perform your job to the degree you promised. It also covers claims of damages or losses resulting from your error or negligence on the job. Technology professional insurance also covers legal defence fees and settlement costs in the event of litigation.
Whether you work for a technology company or are a software developer in another industry, technology professional liability insurance covers you from risks associated with your job.
How Much Does Software Developer Insurance Cost?
The cost of software developer insurance depends on the type of insurance you purchase and your coverage limit. For example, you can opt for a basic CGL policy with a $1 to $2 million limit, or you can purchase more coverage.
Do computer programmers get insurance?
Depending on the company you work for, they might cover you under their overall insurance policy against lawsuits, injuries, property damage, and other liability claims. As a contractor or self-employed computer programmer, purchasing a comprehensive computer software developer insurance policy is always beneficial. Insurance is always a good idea, no matter what kind of business or profession you’re in. If you’re looking for computer software developer insurance, speak with one of our insurance specialists to discuss your options and get insurance quotes.
What insurance do tech startups need?
Tech startups should also have cyber liability insurance and professional liability insurance, especially since young companies are more likely to have cyber attacks and service complaints. You should also have general liability insurance, which protects your startup against claims of third-party injury or property damage while on your premises.
Software Company Insurance ALIGNED by Business Insurance Specialists
Software company insurance needs to be responsive and customized as the programs and apps you develop.
Find the Right Risks Software Company Insurance from ALIGNED
ALIGNED works with Canada’s top insurance companies to provide custom insurance packages at affordable prices. Click Here To Get A Quote or contact one of our business insurance experts for information or with any questions you may have.
