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The Bureau of Labor Statistics reports that the growth rate of professions in the I.T. Industry from 2020 - 2030, which includes software developers, web developers, and app developers, is 22%.
The pay of software engineers, developers, and consultants is decent. The hourly rate for their services is $52.95, and the annual rate is $110,140 a year. Even so, exposures common in the I.T industry can easily lead to a financial breakdown.
Carriers offer protection through software business insurance for software engineers, consultants, and developers. Stay for a while and allow us to discuss what this is.
Software developer liability insurance consists of policies that will pay for the cost of personal injury lawsuits, professional negligence lawsuits, and property damage lawsuits. Liability policies most carriers offer in their software developer insurance are:
Technology errors and omissions insurance
Product liability insurance
General liability insurance with advertising injury coverage
Technology errors and omissions insurance, commonly included in IT contractor insurance bundles, is the policy that will protect software developers from negligence lawsuits. On average, professional negligence from low profile clients can cost $30,000 to $50,000 and those coming from high profile clients can cost $1.3 million. Software developers commit negligence either by mistake or failing to do what was expected of them. Here are some examples of professional negligence lawsuits against software developers:
Travelers Insurance sued Ignition for $154,000 after the website, it commissioned the software company to make, allowed hackers to access one of its partner’s confidential information
Sparta, a software development firm, received a lawsuit from Copart, an online vehicle auction company, after allegedly serving the client unfinished software. Sparta lost the lawsuit and had to pay compensation amounting to millions of dollars.
So how does technology errors and omissions insurance work? Technology errors and omissions insurance gives $1 million up to $2 million so that the policyholder can pay for attorney fees, other legal costs, and compensation to the injured party.
Defective products as a result of negligence can be covered by technology errors and omissions insurance. However, what if the product defect is not due to a software developer’s negligence but because of something else entirely? In this case, product liability insurance is what provides protection.
Gone are the days when software developers can get away with giving half-baked work to clients. Even the slightest error in software can affect organizations. It’s important to note that software developers have liability over any damage their defective work caused. Here’s an example:
In 1995, the software development company, Intuit, released TurboTax, which is an automatic tax assistance software. Sometime after the said software’s release, some users reported that there were defects in the product. Consumers filed a complaint later on which resulted in Intuit paying less than $1,500 in a course of three years.
Stand-alone product liability insurance gives $1 million so that the policyholder can pay for the cost of product liability lawsuits. Understand that a software developer might have to pay $428,000 - $1,792,000 as compensation for product liability claims. And so, product liability insurance is very important.
Sometimes, product liability insurance is included in general liability policy. A carrier that does so is The Hartford.
Every software is the intellectual property of its developers. Copyright infringement is another exposure that software developers have to be wary of. In software development, it’s always possible to face accusations of copying someone’s work. This is why carriers offer general liability insurance for software developers with advertising injury coverage providing protection from copyright infringement lawsuits, libel lawsuits, and invasion of privacy lawsuits.
Advertising injury coverage in general liability insurance offers $500,000 up to $1 million, which the policyholder can use to pay for attorney fees, other legal costs, and compensation to the plaintiff.
Some confuse software engineers with software developers. In truth, the latter has more robust functions than the former. Aside from development, software engineers work to design the functionalities of the software and test them before release.
Since software engineers face exposures unique to them, carriers offer software engineer insurance aside from software developer insurance. The policies included in insurance for software engineers are:
General liability insurance
Product liability insurance
Technology errors and omissions insurance
Some software developers and engineers offer consultancy services for other professionals in the software industry. They function as a trusty source of new software concepts and designs. Carriers offer software consultant insurance as protection from these exposures:
Giving the wrong advice to a client, which is a ground for professional negligence
Personal injuries, property damage, and advertising injuries
The features of software consultant insurance vary depending on which carrier offers it. Some only offer general liability policy and its optional coverages or technology errors and omissions. Others offer both to the customer.
There are also a few which offer other policies such as fidelity bonds, cyber liability, and business interruption. These, by the way, are the best option for software consulting firms.
Freelance software engineers, consultants, and developers should always have technology errors and omissions insurance, general liability and products liability insurance. Having these is a contractual requirement. And so, without these policies, freelance software engineers, consultants, and developers might have difficulties finding clients in e-commerce and other industries.
Toptal, DevTeam, and other freelancing sites treat freelance software engineers and developers as independent contractors. As a result, they won’t provide company insurance coverage in case of trouble.
Software developers and engineers in freelancing sites should at least get their own technology errors and omissions insurance. There are two options - get 1-year technology errors and omissions insurance or short-term technology errors and omissions insurance.
Short-term technology errors and omissions insurance is available in on-demand liability insurance that companies like Hiscox, Thimble, and The Hartford offer.
Having technology errors and omissions insurance is enough as gigs in freelancing sites don’t work through contracts, which often requires the contractor to have technology errors and omissions and product liability insurance. Instead, software developers and engineers in freelancing sites get work by bidding or by receiving direct requests from clients.
Software developers, consultants, and engineers don’t use the generic computers most professionals use. Designing, building, and testing software needs a lot of processing power. And so, many software developers, consultants, and engineers invest in $2,000 computers or something more expensive.
With that said, replacement can be costly. And so, those who don’t have the budget decide to get their personal work computers insured. The question is, “ how? ”.
Software developers, consultants, and engineers can insure their personal work computers by qualifying for commercial property insurance for software companies with equipment breakdown coverage. Equipment breakdown in commercial property insurance will provide coverage if the computer developer, consultant, or engineer’s work computer is damaged because of fire or any accidental loss.
There are instances where equipment breakdown can’t apply even if the work computer is damaged and needs replacement or repair. The exclusions are as follows:
The work computer got damaged as a result of a cyber attack
The work computer got damaged because of using fraud or counterfeit software
The work computer got damaged because of defects in components such as the graphics processing unit, central processing unit, AIO cooler, and random access memory
Aside from insuring their work computer through commercial property insurance for software companies, some software industry professionals get coverage through their homeowner's insurance. There are carriers that treat work computers as one of the home appliances covered. And so, if one is already enrolled in homeowner’s insurance, it’s best to ask the details from the carrier before proceeding to get commercial property insurance with equipment breakdown coverage.
If you can’t qualify for a software developer insurance program, another way of getting insured is to look for an insurance company that offers an IT business insurance program. The policies included will be the same.
Get all the best quotes from leading providers in a click of a button!
Software business insurance that combines general liability policy and technology errors and omissions policy is $62.5 a month or $750 a year
Stand-alone technology errors and omissions insurance for software professionals is $37.5 a month or $450 a year
General liability having product liability insurance will cost $43.16 a month or $517.92 a year
Stand-alone product liability insurance is $40 a month or $480 a year
Commercial property insurance for insuring a work computer is $68 a month or $816 a year
Here's a breakdown of the costs from the best carriers for software company insurance:
| Company | Monthly | Yearly | Best for |
|---|---|---|---|
| Coverwallet | $19 | $228 | Online software business insurance quote comparison |
| Thimble | $26 | $312 | Freelance software business insurance that lasts for an hour, days, weeks, or months only |
| NEXT | $29 | $336 | Independent software industry professionals and small software companies |
| Hiscox | $23.50 | $282 | Big software companies |
Here are some of the best software business insurance companies. Read the reviews below to know their pros, cons, and monthly rate for a $1 million general liability coverage.
| Insuranks rating | 10/10 |
|---|---|
| Best for | Online software business insurance quote comparison |
| Average Cost | $19 per month |
| Year Founded | September 2015 and acquired by AON at 2020 |
| CEO | Inaki Beringuer (former) |
| Headquarters | 101 Avenue of the Americas 18th Floor New York, NY 10013 United States |
| Customer Support | (646) 844-9933 |
| AM Best Rating | A ( excellent) |
| BBB Rating | A+ |
| Number of Complaints | 158 |
CoverWallet offers personalized customer service including live chat with agents
Provides instant proof of insurance
Instant quotes online
Partner of top carriers for software business insurance
Affordable rates
Online policy management through the MyCoverWallet app
Not a carrier but a digital online quote comparison platform where you can directly buy insurance policies
CoverWallet is an insurance broker you can use to find companies that offer tailored coverage for software businesses. This company also sells a tailored insurance for software publishers offering four coverage options - general liability only, general liability and commercial property, BOP, and a custom plan.
| Insuranks rating | 9.5/10 |
|---|---|
| Best for | Short term software business insurance that lasts for hours, days, weeks, or months |
| Average cost | $26 per month |
| Year Founded | 2015 |
| CEO | Jay Bregman |
| Headquarters | New York City |
| Customer Support | hello@verifly.com |
| AM Best Rating | A+ ( excellent) |
| BBB Rating | A+ |
| Number of Complaints | 53 |
Excellent customer service
Provides on-demand general liability and professional liability policies online for as low as $8
Thimble provides software business insurance quotes online instantly
Affordable
Excellent choice for freelancers and part-timers
Free online certificate of insurance
Doesn’t offer bundled general liability, professional liability, and commercial property insurance for freelance software industry professionals
Thimble offers short-term software business insurance plan. Inclusions are general liability and professional liability insurance. You have to get commercial property insurance from the company as a separate policy.
| Insuranks rating | 9.5/10 |
|---|---|
| Best for | Big software companies |
| Average cost | $23.50 per month |
| Year Founded | 1901 |
| CEO | Aki Hussain |
| Headquarters | Pembroke Parish, Bermuda |
| Customer Support | 1-866-424-8508 and customer.relations@hiscox.com |
| AM Best Rating | A - excellent |
| BBB Rating | A- |
| Number of Complaints | 12 |
Direct online quoting and purchase
Coverage can be customized
Hiscox is available in all 50 states
Offers general liability, professional liability, and business owners policy
Hiscox doesn’t offer coverage to software consultants
Hiscox is a great option if you're looking for comprehensive liability coverage. It's because this carrier can give you more than $2 million general liability and professional liability coverage provided that specific requirements are met.
| Insuranks rating | 9.5/10 |
|---|---|
| Best for | Independent software industry professionals and small software companies |
| Average Cost | $29 per month |
| Year Founded | 2015 |
| CEO | Guy Goldstein |
| Headquarters | 75 California Ave, Palo Alto, CA 94304, United States |
| Customer Support | 1-855-222-5919 and support@nextinsurance.com |
| AM Best Rating | A- (excellent) |
| BBB Rating | A+ |
| Number of Complaints | 13 |
Online policy management
Free online certificate of insurance
Allows a customer to purchase software business insurance in less than 5 minutes
Allows for a 10% discount when bundling insurance policies
Some customers report that Next’s rates can be very expensive in select states
NEXT offers tailored insurance for software businesses comprising general liability, professional liability, commercial property, workers comp, and commercial auto insurance. Note that this carrier gives you a live certificate of insurance. Also, coverage is given regardless of location.
Get all the best quotes from leading providers in a click of a button!
References:
U.S. Bureau of Labor Statistics. (2021, September 8). Software Developers, Quality Assurance Analysts, and Testers: Occupational Outlook Handbook. U.S. Bureau of Labor Statistics. Retrieved February 7, 2022, from https://www.bls.gov/ooh/computer-and-information-technology/software-developers.htm#: ~: text=8%25-,Employment%20of%20software%20developers%2C%20quality%20assurance%20analysts%2C%20and%20testers%20is,the%20average%20for%20all%20occupations.
Technology errors and omissions insurance. Technology Errors and Omissions Insurance (Tech E&O) | Insurance Glossary Definition | IRMI.com. (n.d.). Retrieved February 7, 2022, from https://www.irmi.com/term/insurance-definitions/technology-errors-and-omissions-insurance
What is covered by standard homeowners insurance? III. (n.d.). Retrieved February 7, 2022, from https://www.iii.org/article/what-covered-standard-homeowners-policy
Use anyone except Employers. Period. They are non-transparent and shameful. After I complained long enough to warrant a call from a supervisor, the supervisor called back from a PRIVATE NUMBER (no caller ID), left a message that they are not reversing their decision (without any communication with me), and failed to leave a phone number for me to call back. She was hiding! They also fact find via email and phone calls, which is terrific for speed and communication. However, after setting a precedence of email or phone calls, they send time sensitive information via email, without any heads up... they are hoping you miss it and forfeit via expiration. Evil policies. Go elsewhere.
This place is an absolute joke of a company and should be ashamed of the way they conduct business. I was hurt on the job at the end of July and it took them just shy of 7 weeks to issue out a paycheck to me. Yes the amount was back dated but still. Not many have the luxury of not receiving a paycheck for almost 2 months. To top it all off, the original adjuster marked me down for the wrong state which caused a problem from the get go, I've had 3 different adjusters now since each one can't seem to figure out the simplicity of my claim. All my paperwork which includes, my job, house, and drs visits all are from the same state and city but yet some how I have been filed under a completely different state 1500 miles away. They do not answer your phone calls or emails no matter how many you leave. I've had to escalate my frustrations to the supervisors of each of these individuals in order to even get some kind of response. I've had more communication and information given to me about my claim from the customer service representatives then the actual adjusters.......... please tell me how that works?! A serious overhaul needs to happen here in order to serve your clients the way they deserve to be taken care of. 10/10 do not recommend this company to a single soul on earth
I have never had the displeasure of working with a more incompetent and disrespectful person in my life. I’m an injured worker and the adjuster that was assigned to my case was named Carrie Furgeson. In the past 6 weeks that I’ve been injured and out of work I have only been able to get ahold of her twice, not for lack of trying. I have left countless voicemails, countless emails, and she ignores them all. When I am finally able to get ahold of her I’m greeted with terrible customer service. She is rude, she talks over me and I’m hardly able to get a word in edgewise. She spelled my name wrong on my documents even after I spelled it for her properly countless times, this caused a whole new issue with my bank. I have bill collectors from the hospital calling me demanding payment and Carrie Furgeson won’t do a single thing to help, or to get them paid. All of my documentation is in Colorado, my job is in Colorado, my address is in Colorado, all my Dr offices and appointments have been in Colorado and Carrie still managed to hold my claim because she wasn’t sure what state she needed to file it under. It’s been 6 weeks since my Injury and my company still hasn’t received the wage paperwork to fill out so they can get me my correct wages. When she’s not ignoring me she’s answering my questions with “I don’t know” well I don’t know how she got this job, because apparently she doesn’t know anything about it. She is a disgusting morose individual inside and out and I genuinely wish her the worst in all of her future endeavors. I highly recommend you don’t use this company. Please if you are a business owner and your looking into this company please don’t use them. I’m sure they have the cheapest payment and that’s why companies use them in the first place, but you will be doing your employees a grave disservice by forcing them to venture into this absolute dumpster fire of a company. I would rate 0/5 if possible but 1 was the lowest I was allowed.
Their general liability insurance purchase process is simply the best online experience I've ever had in my life!
As long as they cover your line of business, you're literally covered! best rates, best coverage, best online experience, best professionals, can't be happier that I chose them!
Not all those who wander are lost.
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