Insurance For Blockchain Software Development

In recent years, software development has been continuously on the rise, and it’s not slowing down. In fact, the Bureau of Labor Statistics projects a 22% growth in the software development industry this decade.

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But what does software development really mean?

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Well, the term throws a pretty wide-reaching net over lots of different activities. Mainly, software development refers to the entire process of creating, designing, programming, launching, as well as supporting and maintaining software. 

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This means applications, frameworks, or other software products - which are relied on by pretty much any modern business - are all going to fall onto the software developers.

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Since these are so essential to all different types of businesses, companies in the software development industry have an important job, with lots on the line. This means a major risk for them.

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Hence, software development insurance should always be a consideration for any professional in the industry. 

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With any business comes a certain degree of risk. However, when it comes to software development, the possible risks can be somewhat different from those faced by other industries. 

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When considering a software development insurance plan, remember the challenges your industry can face. Here are some of the most common issues that software developers might deal with:

• Cyberattacks;
• Copyright infringement;
• Damage of property;
• Theft and fraud;
• Work-related injuries;
• Other legal suits - for example, former employees suing over wrongful termination.

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You should choose an insurance policy based on the company’s needs, and account for unique challenges and risks. 

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The main types of insurance for software developers to consider are:

• Commercial General Liability
• Commercial Property
• Technology Errors & Omissions
• Commercial Crime
• Cyber Liability
• Professional Indemnity
• Workers Compensation

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Let’s have a look at why you need any of these policies, and how they help and cater to software developer insurance needs.

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Commercial General Liability Insurance

First, let’s talk general liability insurance. This is the most basic and comprehensive type of coverage you can have. A commercial general liability insurance policy is essential for any business, regardless of the industry it’s in - this includes software development.

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The lack of general liability insurance can be disastrous for a company, especially for a small business that has to pay for certain damages out of pocket, which will result in financial ruin.

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So, what does general liability insurance for software developers help with exactly?

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For starters, this type of policy covers claims made against your business resulting from your product, services, or operation. Mainly, general liability insurance policies are concerned with bodily injury, property damage, and advertising injury.

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Next follows an example of what general liability coverage can do for your business:

• Suppose a client is in your office and, accidentally, an employee bumps into them, knocking them to the floor, causing bodily injuries. The client goes to the doctor, gets treatment, but then they go after you to pay for the medical bills. In the US, this can mean ridiculous amounts of money and result in a huge financial loss. However, if you’ve gotten insured, you wouldn’t have to worry about the cost, as general liability software developer insurance will cover it.
• Another example is if some other software development company files a libel lawsuit. These are typically covered by general liability policies, meaning your legal fees will be taken care of by the insurance provider. Since it’s the most common type of coverage, general liability policies will run pretty similar to one another. However, it’s always best to check with each individual provider to find out what exactly is covered before committing to a plan.

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Having the appropriate software development insurance policy in place to cover the damages can help keep your business afloat, so read the fine print!

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Commercial Property Insurance

Commercial Property Insurance is a pretty straightforward name for a policy - it covers your commercial property. This includes your workplace i.e. the place you conduct business, as well as any equipment used to get your job done. In the IT industry, offices and warehouses are generally the types of property that need insurance.

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When it comes to software development, the investments in tools needed to execute a job can be massive, with even small businesses requiring expensive high-end tech. Therefore, commercial property insurance is important for protecting all your expensive assets. 

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Commercial property insurance generally defends against theft and natural disasters, although the extent of coverage will depend on the chosen policy, so make sure to check what you’re paying for exactly. Accidents may be out of your control, but getting the right software developer insurance plan isn’t.

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Business Owner’s Policy 

A business owner’s policy, or BOP, in essence, isa bundle of general liability and commercial property insurance policies. Both are by far some of the most indispensable policies for a software developer to have. This makes a business owner’s policy a good way to get more extensive insurance coverage - combining aspects of both policies - for a more affordable price.

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Technology Errors & Omissions Insurance

Errors and omissions insurance policies may also go under the name professional liability policy. 

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Software development, as wide-encompassing as it is, falls under the even wider-reaching net of technology. This is important since when we’re looking at tech companies, we’ll find a lot of unique errors and omissions exposures that other industries don’t have to face. Many businesses choose to go for the standard errors and omissions - or professional liability - plan. This may seem like a good idea, but for a tech business, it may leave the company lacking any real coverage.

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A technology E&O policy will use specific language that covers aspects standard plans do not.

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Typically technology errors and omission policies cover legal fees, similar to a general liability policy. The difference is the scope of what they protect against. You can’t rely on general liability to cover a suit over failure to uphold professional standards. This is why you need an E&O policy plan for full coverage in the event of legal disputes.

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Fidelity bonds

A fidelity bond protects businesses against losses caused by dishonest or fraudulent employees.

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IT professionals should consider covering their business with both a first party and a third party fidelity bond. 

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First-Party bonds

Also known as an employee dishonesty bond, this type of policy protects your business, commercial property, and assets from fraud committed by employees. This will cover your company’s loss in the event of fraud, forgery, theft, or embezzlement committed by a worker.

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Third-Party 

Also known as a business service bond, this type of policy protects your clients from the actions of fraudulent employees. If someone who works for your business is involved in theft, forgery, or fraud that affects a client - a business service bond will have your back.

For anyone in the computer industry, this is an important part of a tight and efficient software development insurance plan.

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Commercial Crime Insurance vs Fidelity Bonds

While fidelity bonds offer protection in the event of specific business-related employee crimes, a commercial crime policy can provide more extensive coverage against other sorts of criminal activities.

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A proper policy would ideally cover losses related to employee theft, forgery, robbery, or electronic crime. This may sound familiar because it’s also the focus of a fidelity bond. However, a commercial crime policy can also cover non-employee crimes, such as receiving counterfeit money, fraudulent transfers of funds, computer hacking resulting in the misplacement of funds, etc. It’s up to the provider and policy you go with.

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As you can see, a commercial crime policy does cover some computer crimes. Unfortunately, the keyword here is some.

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Any software development business should also have a solid cyber liability insurance policy put in place, for better protection.

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Cyber Liability Insurance

The number of data compromises related to cyberattacks in 2021 exceeds that of all data compromises in 2020. This means that cyber liability insurance is becoming a must.

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While every business that utilizes technology should cover cyber liability, it’s essential for those working so directly in the tech field. Cyber liability insurance can cover a variety of data breaches and security issues. Ideally, you’d want a policy to cover both First-party and Third-party cyber liability insurance.

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But, what’s the difference?

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First-party coverage covers data breaches and cyberattacks that may inflict a business. It protects companies against the financial impact caused and covers losses sustained. This will help protect you against denial of service attacks, malicious destruction of data, viruses, malware, or spyware. This policy will also come in handy in the events of accidents, such as an employee unintentionally destroying data, a power surge wiping out a server, or damages caused to your hardware due to a storm.

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Third-party insurance provides liability protection. This covers the legal cost in the event a mistake made by the company leads to a client suffering a data breach or cyberattack. This is an important type of insurance for tech companies to have, in case they may be blamed and sued for errors that lead to a breach. Sounds pretty useful for software developers.

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With cybercrime on the rise, cyber liability insurance is a huge must-have for anyone in the IT industry.

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Professional Indemnity Insurance (E&O)

Also known as professional liability insurance, Errors & Omissions, or PI insurance, this type of policy covers legal costs and expenses sustained in your defense. 

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That is, if you’re facing a claim, PI will cover the cost of your legal defense, as well as any financial settlements, compensation costs, or damages you may need to payout.

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Professional indemnity is another must-have for full legal safety. Again, it provides different coverage to general liability.

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In the software development industry, the most common things PI will have covered are:

• Professional negligence;
• Breach of contract;
• Intellectual property disputes.

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Because professional liability coverage will depend on the industry, make sure the plan you’re offered is well suited to your business.

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Workers Compensation Insurance

A business is so much more than property and assets - it’s your hard-working employees. As is the case with any profession, software development comes with a risk of work-related accidents, too.

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If you were to be held responsible for such an incident, the financial losses could be enormous. Thus, any software development company should have an adequate workers' compensation policy in place.

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This insurance policy will cover any expenses related to a workplace injury. This includes medical bills, ongoing care, missed wages during recovery, and even death benefits in the most unfortunate events.

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Workers’ compensation may also help cover legal fees in the event of a claim, however, only if the employer’s liability is included in the policy you’re paying for.

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Perhaps the most important thing to talk about is price. Having a successful business means being smart with your funds, and software developer insurance is where you really have to consider money.

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There are many factors that will impact the insurance premium, some of which are:

• Business size and number of employees;
• Projected revenue;
• Type of business;
• Location;
• Your claims history;
• Deductibles

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As you can see, you have some control over factors affecting your premium, so be smart and you can get a lot more out of your insurance plan while paying less.

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Prices will vary. It depends not only on the factors mentioned but also on which policies you choose to go with and the risk involved in your industry.

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The median cost for general liability, for example, is $350 - $900 for $1 million in coverage. Prices will run higher for Cyber liability policies, as software developers face greater risks in that department.

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To lower the cost of your software developer insurance, be mindful of the number of claims you make and choose to pay the annual premium, as it comes at a lower cost.

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Another way to lower expenses is to opt for a business owner’s policy, as mentioned above. Insurance for software developers can already run high, so whenever there’s a way to save money, seize the opportunity.

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The Verdict

Insurance is indispensable to a business, but choosing the right policy is not as simple as it seems. By now you should have a better idea of what to look for and consider when estimating the value of an offer.

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Read the policy carefully, and be aware that the language used makes a huge difference in these documents. 

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As a whole, the tech industry is projected to maintain growth in the upcoming years, so we can expect a lot more from software development insurance offers.

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The process to get insurance is an easy and straightforward process. You get us the information we need to engage insurance providers and we'll supply the best possible quote(s). We're also real people that probably live in your city, and we value relationships, so meeting in person is always an option. At the end of the day, our job as brokers and advisors is to educate you on what everything means. It also helps us to understand your business and insurance needs, so we can get underwriter comfortable with quoting. We'll help you understand insurance and risk management practices, and be there for you as the business grows.

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Some traditional businesses can move through the process faster as a lot of underwriting is supported by artificial intelligence, but most policies today will be reviewed by an actual person. We have decades of experience working with the underwriters at each insurance company, and pitch your business to each of them. We work with and for you.

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The standard process to produce quotes for your business is as follows:

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1. Advisor Introduction: this can be a quick phone call, email, video conference or in person meeting. You'll decide if you enjoy the advisor and trust their advice. This is also where you'll be able to ask questions, provide information about your operation, and go over the process to get insured.
2. Data Collection & Underwriting: this is where you'll get into the fine details about underwriting questions and information that will be necessary to engage the insurance market. You'll be able to chose from filling out PDF's, going through our smart-form technology, or provide it all over the phone, email, or in person.
3. Quote Proposal & Review: once your advisor has the information needed for underwriting, they will work with the insurance market to produce quotes. This can take a day or up to a week, depending on the time and operation.
4. Finalize Coverage: here you'll decide the coverage to move forward with. Final steps include signed documents, payment, and selecting a specific start date.

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ADIVSOR TIP: Be prepared to spend 5-10 minutes with your advisor to break the ice and get the ball rolling. Once aligned, your advisor will create clear next steps and create a timeline for quotes. If your business is new, and has unique risks, then you should expect a little back and forth.

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Get in touch with your advisor, or send over the details digitally today.