Buy Application Development Insurance

Application development insurance is a type of insurance that provides coverage for businesses that develop and distribute software applications. This type of insurance is designed to protect businesses from financial losses that may occur as a result of errors or omissions in the development process, as well as from claims of intellectual property infringement or breaches of contract.

Coverage may include protection for third-party claims of damages, legal fees, and other expenses related to defending against such claims. It may also include coverage for lost profits or revenue due to business interruption caused by a software development failure or delay.

The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small application developers ranges from $27 to $49 per month based on location, types of apps developed, payroll, sales and experience.

Application developers need insurance to protect themselves from potential financial losses resulting from claims of errors or omissions in their software. This can include errors in code, failure to meet specific requirements or specifications, or failure to deliver a product on time.

Additionally, insurance can also provide protection against claims of copyright or trademark infringement, as well as data breaches and cyber attacks. Without insurance, developers may be at risk of significant financial loss if a claim is made against them.

Furthermore, insurance can also protect application developers from third-party liability claims. For example, if an individual or business suffers a loss as a result of an application developer's software, they may seek compensation for that loss. Without insurance, developers may be held personally responsible for paying those damages. This can be especially concerning for small businesses or independent developers who may not have the financial resources to cover such a loss.

Additionally, insurance can also provide protection for legal expenses, such as those associated with defending against a claim. This can be especially important for application developers, as legal disputes can be costly and time-consuming. Having insurance can help to ensure that developers have the resources they need to defend themselves in court.

Overall, insurance is an important consideration for application developers. It can provide peace of mind and financial protection against a wide range of potential risks, including errors and omissions, intellectual property disputes, data breaches, and third-party liability claims.

Following are some common risks that a application development insurance policy protects against.

Application development is a relatively new field however most of the issues that any other company must be insured against still apply.

General Liability Insurance

Will likely to be on the first page of your application development insurance policy because even though your line of business won't give you much face-time with actual people, you need to be sure that on the odd day that a client does come into the office then slips and falls on wet patch, you won't be out of pocket for his medical bills.

Errors and Omissions Insurance

Sometimes you're going to make a mistake. Professional liability (also known as E&O) is there to help in the case that you made a mistake in the delivery of the application or if the client insists that you made an error even when you know that you followed the terms in the contract to the letter.

As a professional you expect to deliver what your clients want every time however you're still human therefore there's a good chance that you might get something wrong. Don't let a small mistake cripple your business - get the right application development insurance.

Cyber Liability

Cyber security is extremely important in the world of software and application development. Many businesses that you work with will require you to set up a payment portal for their clients which holds very sensitive information that hackers would love to get their hands on.

In some cases, those hackers are successful even though you followed all of the industry-standard security protocols which means that you'll probably be sued.

Data breach lawsuits are extremely expensive to defend against and if you lose the case then you will be forced to pay the company for loss of income and reputation. Cyber Liability Insurance will help you to pay for all or part of any settlement and your legal fees.

Business Owners' Policy

Is another type of application development insurance that every small business should consider. BOPs bundle property, liability and business income along with other coverages.

App developers generally don't have many buildings or assets to protect however in the case of a fire in your server room then you need to know that you will be able to get that vital hardware replaced.

Workers Compensation And Employment Practices Liability Insurance

Workers comp is designed to cover any medical or legal bills that might arise from your employees getting injured while working for you, for example if an employee suffers from an electrical shock while running routine maintenance on your servers.

EPLI is for a situation that involves sexual harassment in the workplace that leads to your business being sued.

Fidelity Bond

This is designed to protect you and your client in the event that one of your employees runs off with your client's sensitive information or money while designing the application. As much as you would like to believe that your employees are trustworthy, a fidelity bond will keep you from relying on trust alone.

Here are some common reasons why application developers may be sued:

Intellectual Property Infringement: Application developers may face lawsuits if their applications are accused of infringing on someone else's intellectual property rights, such as copyrights, trademarks, or patents. This can happen if the developer uses copyrighted content, includes patented technology without proper authorization, or uses a trademarked name or logo without permission.
Insurance Protection: Intellectual Property (IP) infringement liability insurance can provide coverage for legal defense costs and damages in case of IP infringement lawsuits. If an application developer is sued for IP infringement, their insurance policy may cover the costs associated with defending against the lawsuit, as well as any damages awarded to the plaintiff, up to the limits of the policy.

Privacy and Data Breach: Application developers may face lawsuits if their applications are involved in a privacy breach or data breach, resulting in the unauthorized access, theft, or disclosure of personal or sensitive information of users or customers. This can happen due to inadequate security measures, vulnerabilities in the application, or failure to comply with privacy regulations.
Insurance Protection: Cyber liability insurance can provide coverage for legal defense costs, settlements, and damages related to privacy breaches and data breaches. If an application developer is sued for a privacy or data breach, their insurance policy may cover the costs associated with legal defense, settlements or damages awarded to affected parties, and notification and credit monitoring services for affected users or customers, up to the limits of the policy.

Professional Negligence: Application developers may face lawsuits if their applications are deemed to have been developed or delivered with a negligent or substandard level of professionalism, resulting in financial loss or harm to users, customers, or other stakeholders. This can happen due to programming errors, software bugs, or failure to meet industry standards or best practices.
Insurance Protection: Professional liability insurance, also known as errors and omissions (E&O) insurance, can provide coverage for legal defense costs, settlements, and damages related to professional negligence claims. If an application developer is sued for professional negligence, their insurance policy may cover the costs associated with legal defense, settlements or damages awarded to plaintiffs, up to the limits of the policy.

Breach of Contract: Application developers may face lawsuits if they breach a contract with a client, such as failing to deliver a completed application, missing deadlines, or not meeting contractual obligations related to functionality, performance, or quality.
Insurance Protection: General liability insurance or technology errors and omissions (Tech E&O) insurance may provide coverage for breach of contract claims, depending on the specific policy language. If an application developer is sued for breach of contract, their insurance policy may cover the costs associated with legal defense, settlements, or damages awarded to the plaintiff, up to the limits of the policy.

Advertising and Marketing Liability: Application developers may face lawsuits related to their advertising or marketing activities, such as false or misleading claims, defamation, or infringement of intellectual property rights in marketing materials, app descriptions, or promotional campaigns.
Insurance Protection: Advertising injury liability coverage, which is often included in general liability or technology errors and omissions (Tech E&O) insurance, can provide coverage for legal defense costs, settlements, and damages related to advertising and marketing liability claims. If an application developer is sued for advertising or marketing-related claims, their insurance policy may cover the costs associated with legal defense, settlements, or damages awarded to the plaintiff, up to the limits of the policy.

It's important to note that insurance policies may have specific terms, conditions, and exclusions, and the coverage may vary depending on the type of policy and the insurance provider. It's essential for application developers to carefully review their insurance policies and work closely with an insurance professional to ensure they have appropriate coverage that aligns with their specific needs and risks.

In summary, insurance can play a vital role in protecting application developers from financial losses associated with lawsuits. Depending on the type of insurance coverage, it may help pay for legal defense costs, settlements, and damages awarded in various types of lawsuits, such as those related to intellectual property infringement, privacy and data breach, professional negligence, breach of contract, advertising and marketing liability, and others. However, it's crucial for application developers to understand the specifics of their insurance coverage, including the terms, conditions, and exclusions, and seek professional advice to ensure they have adequate protection for their unique risks and exposures.