Why do software developers need insurance?
As a software developer, the code you develop will often benefit customers for many years into the future. However, as systems become complex, your software test plans may only catch some possible bugs before your code is deployed to production.
Your code is causing havoc
As an application developer, there's always a chance your code could go wrong. If, at some point, your work goes on to cause havoc, there’s always a risk your client could come after you for compensation.
Accusation of causing a financial loss
Mistakes in payment systems, online sales, or management info can lead to financial losses. If this is caused by your code you could face legal action from unhappy customers.
Damage to your work equipment
Losing or damaging your work laptop can be expensive and impact your business. Home insurance may not cover business equipment used at home.
IR35 enquiries and unpaid invoices
If you use an umbrella company or contract directly, you may also be exposed to IR35 enquiries from HMRC. Regardless of how you're engaged, you still could be subject to late or non-payment of invoices.
Professional indemnity insurance for software developers
Professional indemnity insurance is essential for software developers to stay protected against accusations of professional mistakes, negligence, copyright infringement and other claims against you or your business as a result of your work.
Software developers should consider professional indemnity insurance to protect themselves from potential expenses and legal disputes that can arise from errors in their code. The cost is reasonable compared to the potential risks.
What does software developer professional indemnity insurance cover?
Professional indemnity insurance protects software developers from claims or accusations of wrongdoing from their professional advice or work product.
Cover includes:
- Failing your duty of care
- Making a mistake
- Acting negligently
- Giving the wrong advice or recommendation
For example:
- Your code failed to deliver the expected capability, and you are asked to cover the cost of further development
- You’re facing a legal claim because someone believes you have used their code
- A weakness in your code has led to a security breach, resulting in a financial loss to your client
- Inability to finish your task on time and therefore costing your client money, which they look to recover from you
Does professional indemnity insurance cover my software development activities worldwide?
Your professional indemnity policy's ‘territory or geographical limits’ and ‘jurisdiction’ sections specify if your software developer insurance will respond when working in different countries.
Territory or geographical limits:
The territory or geographical limit specifies where you can virtually or physically deliver your services. For example: “Worldwide.”
Jurisdictional limit:
The jurisdictional limit specifies which legal jurisdictions your policy will defend you if you are sued. For example: “Worldwide excluding US and Canada.”
Contract governance:
Any contracts or agreements you enter into with your clients should specify the ‘governing law’ for that contract, which is the jurisdiction in which parties can seek legal remedy for breach of contract.
Avoid entering contracts not governed by your local jurisdiction and/or excluded by your software developer professional indemnity insurance.
If you work with US and Canadian clients, you can reduce your risk by not entering contracts governed by US and Canadian laws.
Switching your professional indemnity insurance
Typically, in the UK, if you cancel a professional indemnity policy, you can no longer claim against it.
Therefore, if you switch your software developer insurance provider, be sure your new policy covers your past work; this is called “retroactive cover”.
Should I have professional indemnity if I am between contracts?
It’s wise to keep your professional indemnity if you’re taking a break or retiring from software development. Claims against professional misconduct can surface months or years after you delivered the work.
Remember: If you cancel your policy, your insurance coverage will end, including coverage for any previous work.
How long you keep your cover in place is up to you. Consider the type of software development you did and the likelihood that a client might bring a claim against you.
Public liability insurance for software developers
Public liability insurance shields software developers from claims of injuries or property damage.
If you're a software developer who meets clients in person, consider getting public liability insurance to protect yourself from unexpected incidents. It's affordable and can cover expenses like legal defence or damages to someone else's property.
What does software developer public liability insurance cover?
Public liability insurance is valuable when faced with injury claims and compensation demands.
Cover includes:
- accidental injury or death
- accidental property damage
For example:
- A client visits your premises and is injured in a slip or fall
- You visit a client site and damage equipment by knocking over a coffee
Other insurance software developers buy
As a software developer, the insurance you require will vary depending on your circumstances. Consider if you have the means to replace your computer equipment if it is lost, damaged, or stolen. If you have employees you might need employers' liability. Could you manage a legal dispute if one arose? Are you prepared to respond to an HMRC tax audit?
Commercial legal expenses insurance
Most commercial legal expenses insurance will protect software developers against various tax and legal issues you may encounter due to your profession, which are not covered by professional indemnity or public liability.
At Suited, we combined £100,000 of commercial legal expenses insurance with helplines and other tools to better assist software developers in dealing with these issues. We call this Business Legal Protect, and it’s part of your subscription.
Business Legal Protect offers qualified advice and assistance with:
- Legal and accountancy matters concerning your business
- Criminal prosecution
- Compliance & regulation issues
- Unpaid invoices (over £200)
For example:
- HMRC flags you for an IR35 investigation
- You need legal help chasing a major unpaid invoice
- You need guidance on compliance issues for your business
Electronic business equipment insurance
Consider electronic business equipment insurance. In this line of business, you are bound to be heavily reliant on all things electronic. Whether this equipment is yours or hired, you will be faced with the cost of repair or replacement should an accident happen.
If your laptop is expensive and you carry it everywhere, the risk of losing or breaking it is higher.
Software developers rely on electronic equipment to deliver their services more than ever. If the business equipment is essential to your work, consider whether the cost of repair or replacement would be better to protect by insurance.
Cyber insurance for software developers
Is the work you deliver prone to a cyber security issue? Cyber insurance is a very specialised product, and even though professional indemnity insurance for software developers may include a little element of it, it’s unlikely to be enough for your line of work.
If your work is exposed to risks of cybercrime, look for a cyber insurance specialist. As a software developer, you understand how complex this issue is and often need help explaining it quickly to a third party. You’ll need your insurer provider's experience, knowledge and resources to assist you.
Software developers we insure
Suited offers comprehensive insurance policies that cater to the needs of a wide range of software developers, including:
- Computer games designers
- Computer programmers
- Software consultants
- Software contractors
- Software engineers
- Website developers
- Mobile application developers
- and more..
Shopping for software developer liability insurance
You may or may not choose to use Suited for your software developer insurance. Either way it’s worth keeping the following in mind:
Cheap software developer insurance
Whether you decide to use Suited for your software developer insurance is entirely up to you. However, when choosing your insurance consider the following:
The reputation of the insurer is important
When it comes to insurance, it's crucial to have a provider you can rely on. At Suited, we only work with financially stable insurers who have a top-notch reputation and an A+ rating.
Many providers charge fees to amend or cancel
Be wary of companies that offer low initial prices, as they may have hidden fees for monthly payments, policy amendments, or cancellations. At Suited, we don't charge any additional fees, and you can cancel your policy at any time without any extra costs.
Some policy wordings are restrictive or have a high excess
Some insurers may offer attractive prices, but it often means sacrificing the level of coverage provided. At Suited, we offer professional indemnity and public liability insurance with a £0 excess.
