Application development companies must evaluate the liabilities and risks of everyday business. Dealing with incidents such as a lawsuit or cyberattack can financially devastate many companies or even bankrupt them. This is why it’s important to consider purchasing insurance policies that will provide financial protection, whether it’s from a physical disaster like a fire, a lawsuit filed by a dissatisfied client, or a cyberattack that puts your computer network out of commission.

What insurance coverage do I need for my app development company?

While there are many types of coverage for companies to consider, these insurance policies are particularly important for app developers to consider:

Professional Liability Insurance

Many modern businesses rely on apps as a crucial aspect of their business, and they could suffer significant financial losses if their app fails. No matter how careful you are, there’s always a chance that a mistake could be made during the app development process. If the app you developed for a client doesn’t work as expected, you could be sued. Professional liability insurance can protect your business against these risks by covering lawsuits and damages brought by dissatisfied clients.

Example:

• Your company is hired to create a new app for a chain of yoga studios. When the app is released, a key function that allows users to purchase yoga classes through the app fails to work correctly, and the yoga studio loses revenue as a result. The yoga studio sues for damages. Your insurer would cover the lawsuit and any damages or settlements.

General Liability Insurance

Most companies have some level of general liability risk. If you ever hold meetings with clients at your offices, send employees to visit clients at their offices, or have outside workers such as delivery people on your property, it’s a good idea to consider general liability insurance. There is always a chance that a non-employee could be injured or someone else’s property could be damaged in the course of your work. General liability insurance covers these common third-party bodily injury and property damage risks. It also includes a personal and advertising injury component, which provides coverage for a number of risks, including libel, slander, and copyright infringement.

Examples:

• Property damage: Employees of your company visit another company’s offices. They accidentally knock an expensive sculpture off its pedestal, destroying it. Your general liability insurance would pay for the damage.
• Bodily injury: A client visits your offices to consult on an app you have been contracted to create for them. While at your offices, the client slips on a wet floor and fractures an elbow. Your general liability insurance would cover medical costs and legal costs if the client sues.
• Personal and advertising injury: In an ad campaign promoting one of your latest apps, you use artwork that looks very similar to a professional illustrator’s designs. The illustrator sues you for copyright infringement. Your insurer would pay for legal defense and any settlements.

Cyber Liability Insurance

Hacking and cyberattacks are ongoing risks since hackers continue to develop new methods of accessing systems. Cyber liability is an issue for most modern companies, but it’s a particularly important consideration for app developers, since they may deal with large amounts of customer data or create apps for clients that store customer data. You could be held liable if hackers are able to access confidential data through one of your systems. The costs of recovering from a cyberattack are high, and news of hacks can damage your reputation among consumers as well. Cyber liability insurance can provide financial assistance to help your company stay in business in the event of cyberattacks, and insurers often provide resources to help you prevent incidents as well.

Examples:

• A virus spreads through your company’s computer network, deleting or corrupting important data and delaying several major app development projects. Your insurer will pay for the costs of hiring consultants to remove the virus and restore data. It will also reimburse you for income you lost due to the delays.
• Your company servers are breached and hackers steal your customer database, including credit card information and email addresses. Your customers are furious and sue your business for failing to adequately protect their confidential data. Your insurer will pay for your legal fees and any settlements or judgments in the case.

Commercial Property Insurance

Most companies operate in space they rent or own, and app development companies often rely on expensive electronics such as computers and cell phones, which may be difficult to replace. If an unexpected disaster strikes, the costs of recovery can be high. It may even be impossible to continue operating your business if necessary property is damaged or destroyed. If a catastrophe occurs, commercial property insurance can help you recover.

Commercial property insurance covers the following:

• Buildings belonging to or leased by your company
• Contents of the building
• Property of others while it is under your care, custody, or control

Examples:

• A faulty refrigerator in your company’s break room starts a fire. It damages your building and equipment, including computers and printers. Your insurer will pay for repairs to the building and replace your equipment.
• In the example above, an espresso machine you leased for your break room is also destroyed. It is considered property under your care, custody, or control, so your insurer will pay for it.
• Someone breaks into your company’s offices and steals dozens of cell phones. Your insurer would reimburse you for the value of the phones.

Additional Coverage

• A business owner’s policy combines general liability, property, business income, and extra expense coverage into one package. For small or midsize companies, this type of policy could help you obtain a wide range of coverage while paying less in premiums than you would if you bought several separate policies.
• Commercial auto insurance is necessary for any business that owns one or more vehicles titled under the business’s name. It covers bodily injury and property damage if the driver of the vehicle is at fault in an accident, as well as the value of the vehicle itself if it’s damaged by a collision or another peril.
• Business income coverage will reimburse you for lost income and operating expenses if your business is unable to operate due to a covered reason, such as fire, storm damage, or other property damage.
• Workers’ compensation insurance is legally required for companies with employees in most states. It covers employees’ medical expenses and lost income if they are injured while working.

Pricing and Quotes

Pricing for business insurance will vary based on the type of insurance coverage and the risk profile of your business. Insurers consider factors such as:

• Business size
• Industry
• Location
• Number of employees
• Claims history

Businesses with higher risks will have higher premiums than those deemed lower risk. For example, an app development firm with a history of frequent claims will face higher premiums. Premiums also rise as you increase the limits of insurance. Different insurance companies have different models for rating risks, so it is worth comparing pricing across different insurers.

In order to get an accurate estimate on pricing, it’s best to get a quote from a reputable insurance company. Below we’ve highlighted a few of our trusted partners who offer coverage for technology businesses:

Provider	General Liability	Professional Liability	Business Owner's Policy
Embroker	??	??	??
CoverageSmith	??	??	??
CoverWallet	??	??	??
Hiscox	??	??	??
Thimble	??	??	??

Final Word

Purchasing the right insurance coverage can protect your app development company from a variety of major risks. It’s important to consider your business’s individual needs as you choose insurance policies. In addition to common risks like property damage and injuries, you could be sued for your professional work or have your business brought to a halt by cyberattacks. Ensuring that your company has a wide range of insurance coverage can give you, your employees, and your clients peace of mind, knowing that if an unexpected disaster occurs, your company will be financially protected.