Common Risks for Developers, Coders, and Software Engineers
Here are some examples of the risks people in your line of work might face and the insurance policies that can help.
- Copyright infringement. An app developer is working on a game that’s more addictive than Candy Crush Saga and Angry Birds combined. He jokes on his company's blog that both popular games will seem like "real snooze-fests in comparison." He also includes screenshots from both games. A lawyer from Angry Birds sees the post – which includes improper use of the game's copyrighted images – and files a lawsuit against the developer for $300,000 in damages for defamation and copyright violation. Guess the developer shouldn't have tangled with a company that has "angry" in its name. Luckily, General Liability Insurance offers coverage for advertising injury cases like this.
- App mishap. A local chamber of commerce hires a developer to design a new app. It quickly becomes clear that the developer's client doesn't really understand how apps work. The developer tries her best to explain, but they just aren't getting it. She delivers the app on time and in accordance with the original contract, but her client sues anyway, claiming she didn't give them what they wanted. In this case, the developer's Errors and Omissions Insurance can help pay her legal fees.
- Cyber attack. Let's say that same app also served as a way for the chamber of commerce to capture customer information. It works just fine, but one day, a cyber crook hacks the code and steals personal details for hundreds of customers, including credit card numbers. Yikes! The client sues the developer over the data breach, which will likely cost more than $100,000 to settle. Fortunately, most Errors and Omissions policies include Cyber Liability Insurance, which can pay for lawsuits related to third-party data theft.
- Coffee vs. client electronics. A software developer has an 8:00 a.m. meeting with a client to discuss a major project. Naturally, he shows up with a large Dunkin' Donuts Dunkaccino to propel him through the meeting. After the developer catches his caffeine buzz, he gets overexcited and knocks over his coffee – all over the client's laptop and Google Pixel phone. Both are toast. Good thing he has a Business Owner's Policy (BOP). It includes General Liability Insurance, which can help replace the client's damaged items.
- Employee injury. Up against a tight deadline to deliver enterprise software for a new client, a developer's employee performs a late-night marathon coding session. Three cans of Red Bull and seven hours later, he finishes the project. In the following weeks, the employee starts to develop carpal tunnel syndrome. Surgery is going to cost $20,000, and the developer's Workers' Compensation Insurance helps pay for it. If the employee sues his employer over the injury, the Employer's Liability Insurance portion of the Workers' Comp policy may cover the legal costs.
- Working for a credit union. A developer wins a bid to design a mobile banking app for a local credit union. In the contract, it specifies that she must purchase a Fidelity Bond. After purchasing the bond and showing proof of insurance, she signs the contract and gets to work. A few days after she delivers the app, the client calls, furious. An employee built a backdoor in the app and used it to electronically wire money to his bank account. In this situation, the Fidelity Bond can reimburse the credit union for its losses.
- Disgruntled former employee. A developer fires an engineer after his shoddy software testing caused the business to ship a program riddled with errors. However, the employee claims he wasn’t given adequate testing time. He claims the developer rushed the project and the termination is unfair. This is when Employment Practices Liability Insurance can come to the rescue. It can pay for trial costs and potential damages awarded to the former employee.
Software Development Business Insurance and Risk Management Pointers
It doesn't make sense to lump all "software engineering" into one category. Each software developer has unique risks because each one specializes in different software and works with different clients. When you insure your business, you'll want to work with small business insurance experts who understand that.
As the nation's leading online provider of business insurance for small IT firms, TechInsurance can help small tech businesses, freelancers, and independent contractors find insurance. And to help you successfully navigate the world of insurance and risk management, we offer plenty of free resources.
Start by exploring different types of business insurance, a glossary that translates "insurance-ese" into plain English, and sample insurance quotes. We also have business development tips on our resources page, so check it out!