How much does insurance cost for software developers and programmers?

Software development businesses spend an average of $83 per month, or $990 yearly, for technology errors and omissions insurance. This combined coverage bundles errors and omissions insurance and cyber insurance into one policy, often costing less than buying each coverage separately.

Also known as professional liability insurance, E&O insurance protects small businesses against claims of professional negligence. For example, a software developer's error in coding could cause the client financial loss, resulting in a lawsuit.

Tech E&O includes third-party cyber insurance with this coverage, which adds extra protection in case your software development services unintentionally cause a data breach or cyberattack at a customer's company.

Below is the average E&O policy for software developers who purchase from TechInsurance:

Insurance premium: $83 per month
Policy limits: $1 million per occurrence; $1 million aggregate
Deductible: $2,500

Errors and omissions insurance cost for software developers is based on many factors, including the coverage limits you choose, the types of professional services you provide, and your claims history.

Software development companies spend an average of $150 per month, or $1,799 annually, for cyber insurance. Also known as cyber liability insurance or cybersecurity insurance, this policy helps pay for the cost of complying with your state's data breach laws.

Cyber insurance covers expenses related to a data breach or cyberattack, including legal fees and customer notification costs. It is especially crucial for companies that store personal customer information, such as credit card numbers or Social Security numbers.

The cost of cyber insurance primarily depends on the amount of sensitive information you handle at your software development agency.

Software development startups spend an average of $30 per month, or $365 per year, for general liability insurance. Though usually not required by law, a general liability policy may be needed in order to sign a lease or work with some clients.

General liability coverage protects your small business from common third-party risks, such as customer property damage or bodily injury. It also pays for lawsuits related to copyright infringement and advertising injury, including slander and libel.

For example, if a competitor claims that a software developer at your company made a disparaging statement about them on social media and decides to sue, a general liability policy would pay for any legal costs.

Below is the average general liability insurance policy for software developer businesses that buy from TechInsurance:

Premium: $30 per month
Policy limits: $1 million per occurrence; $2 million aggregate
Deductible: $500

If you have a small software development business and it's low-risk, TechInsurance's licensed agents usually recommend a business owner’s policy (BOP). A BOP bundles general liability insurance with commercial property insurance at a lower cost than buying these policies separately.

For software developers, the average cost for a business owner's policy is $47 per month or $569 per year. To protect against financial losses due to a forced closure, such as from a fire or flooding, you can also add business interruption insurance to a BOP.

The cost of general liability insurance is based on several factors, including the types of services offered, policy limits, size and location of your company's business property, and any subcontractors or additional insured endorsements you may have.

The average cost of a fidelity bond is $89 per month, or $1,067 annually, for software developers. Some clients, especially those in the financial services industry, may mandate a bond in order to sign a contract with them.

Fidelity bonds, a type of surety bond, protect your clients by reimbursing them in the event your employee commits theft, fraud, or forgery. This includes illegal electronic funds transfers and unapproved credit card purchases.

The cost of a fidelity bond is a certain percentage of the total bond amount. Unlike most insurance policies, this amount must be paid back to the company that issued the bond.

Software development business owners spend an average of $34 per month, or $411 annually, for workers' compensation insurance. To comply with state requirements and avoid penalties, software development companies with one or more employees typically must purchase this policy.

Workers' comp coverage pays for medical expenses and disability benefits when you or an employee suffers a work-related injury or illness. For example, if a computer programmer at your company develops carpal tunnel, a workers' comp policy would pay for their treatments and lost income while they recover.

Workers' compensation coverage also often includes employer's liability insurance, which pays for defense costs and other legal fees in the event of a lawsuit related to workplace injuries.

Even though workers' comp may not be required for sole proprietors or independent contractors, it is highly recommended since most health insurance plans can deny claims for injuries that occur at your jobsite.

The cost of workers' comp is based on numerous factors, including the number of employees you have and their occupational risks.

Technology companies spend an average of $198 per month, or $2,375 yearly, for commercial auto insurance. Almost every state requires this type of insurance if your software development business owns any company vehicles.

If your business vehicle(s) are involved in an accident, a commercial auto policy would help cover property damage costs and any medical bills. This coverage also helps pay for costs related to vandalism, weather damage, and theft.

To protect personal, rented, and leased vehicles used for business purposes, you'd need hired and non-owned auto insurance (HNOA) instead.

The cost of commercial car insurance depends on many factors, including your employees' driving records, policy limits, the number of vehicles you own and their value, and your coverage options.