Overview
A software publisher designs, builds, licenses, and supports applications that customers depend on to run their own operations. When a product fails to perform as promised, contains a defect, or handles customer data, the resulting exposure is largely about your code and the contracts behind it. A program for a software company should reflect how you deliver your product, the data you touch, and the insurance terms your enterprise customers and investors expect.
Part of our technology & internet insurance guidance.
Risk profile
Software publishers face exposure that is concentrated in their product and their data handling rather than in physical premises. A defect, outage, or failure to deliver promised functionality can lead customers to allege financial loss, and these claims often blend professional services with technology product issues. Publishers also store or process customer data, integrate third-party code and APIs, and grant licenses under contracts that frequently require specific insurance and indemnity terms. Intellectual-property disputes over code or content are an added consideration, and exposures vary widely by product type and customer base.
Common risks
Software errors and performance failures
A defect, bug, or failure to deliver promised functionality could cause a customer financial loss and lead to a claim.
Data breaches and security incidents
Storing or processing customer data exposes the company to breach response, liability, and regulatory costs after an incident.
Service outages and downtime
An interruption or failed deployment could disrupt customers who rely on the software, prompting allegations of lost revenue.
Intellectual property disputes
Claims may allege code, content, or branding infringes a third party's copyright, trademark, or patent rights.
Contractual insurance requirements
Enterprise customers often require tech E&O, cyber, and specific limits in master service agreements before signing.
Investor and management liability
Funded companies may face claims against directors and officers over governance, disclosures, or financing decisions.
Recommended coverages
Coverages commonly relevant to software publisher operations. Not every business needs the same policies.
Employee-Related Coverage
Contractual Coverage
Additional Protection
Why tailored insurance matters
Software companies differ enormously in their exposure. A consumer mobile app, a developer-tools vendor, and a SaaS platform handling regulated healthcare data face very different risks, and an early-stage startup has different needs than a scaled company with enterprise contracts. A program built around your product, data, contracts, and funding stage helps the coverage keep pace with how you grow. Coverage depends on the specific policy, endorsements, exclusions, and facts.
Hypothetical claim examples
Defect causes customer loss
A customer alleges a software defect corrupted their data and disrupted operations. A technology E&O policy may respond to defense and covered damages, depending on policy terms.
Customer data exposed
An attacker reportedly accesses a database holding customer records. A cyber policy may help with forensics, notification, and liability costs, subject to policy terms.
Infringement allegation
A third party claims a feature infringes its intellectual property. Depending on how the policy is written, certain defense costs may be addressed, subject to policy terms.
Hypothetical scenarios for illustration only. Coverage depends on the specific policy, endorsements, exclusions, and facts of each claim.
What affects insurance cost
- Type of software and how it is delivered
- Annual revenue and customer count
- Sensitivity of data processed or stored
- Contractual limit and indemnity requirements
- Security practices and development controls
- Funding stage and number of employees
How much does it cost?
There is no single price for software publisher insurance — it depends on which of these coverages you carry and the specifics of your business. As a rough guide, here are general national averages for the coverages this business commonly needs.
- $500–$2,000 per year for many small firms
- $1,000–$3,000 per year for many small businesses
- $1,000–$3,000 per year for many small businesses
- $1,500–$5,000 per year for many private companies
- $500–$3,000 per year, driven largely by payroll and job class codes
- $400–$1,500 per year per $1M of additional limit
These are general national averages shown for comparison only — not a quote. Actual premiums vary widely with underwriting and depend on the factors above and the specifics of your business, including size, revenue, location, claims history, and the limits you choose. See how we estimate costs.
Coverage considerations
- Confirm tech E&O and cyber are coordinated rather than overlapping
- Match limits to the largest contractual requirements you face
- Review how intellectual property claims are treated
- Consider D&O if the company has taken outside funding
Common underwriting considerations
When insurers review a software publisher business, they commonly evaluate factors like these. This is educational information — nothing here is collected or submitted.
- Products and services delivered, and whether failures could cause client financial loss
- Annual revenue and largest-client concentration
- Data collected, stored, or processed, and the security controls around it
- Contract practices, including limitation-of-liability wording
- Claims history, especially E&O and security incidents
- Reliance on third-party infrastructure and vendors
Common contractual insurance requirements
Contracts, leases, and licenses in this industry commonly impose insurance requirements such as these. Always review the specific wording in your own agreements.
- Enterprise client agreements commonly require technology E&O and cyber liability at set limits
- Many contracts require additional-insured status on general liability
- Data-processing agreements impose breach-notification and security obligations
- Office leases require general liability with the landlord as additional insured
- Investor and board arrangements often expect D&O coverage
Common coverage mistakes
Mistakes businesses in this industry commonly make when arranging coverage — worth reviewing before you buy or renew.
- Assuming general liability covers software failures or bad advice — that requires tech E&O
- Buying cyber limits far below the data exposure actually held
- Missing contractual-liability review before signing enterprise indemnities
- Overlooking media liability for content, advertising, and IP claims
- Letting claims-made E&O lapse between funding stages or carrier changes
Frequently asked questions
What is technology errors and omissions coverage?
It is a form of professional liability for tech companies that may respond when software fails to perform or contains an error that causes a customer financial loss, depending on policy terms.
Do software publishers need both tech E&O and cyber?
Many do, because they address different exposures. Tech E&O focuses on product and service failures, while cyber focuses on data breaches and security incidents. The right structure depends on your operations.
Why do enterprise customers ask about our insurance?
Master service agreements often require specific coverages and limits, such as tech E&O and cyber, before a customer will sign. Reviewing contracts early helps align your program with those demands.
Does insurance help with intellectual property claims?
Some policies may address certain IP-related defense costs, but treatment varies widely. Coverage depends on the specific policy, endorsements, exclusions, and facts, so the wording should be reviewed carefully.
Should a funded startup consider directors and officers coverage?
Often, yes. Companies with investors may consider D&O, which may respond to claims against leadership over governance or financing decisions, depending on policy terms.
How is software publisher insurance priced?
Pricing commonly reflects revenue, data sensitivity, contract requirements, security controls, and headcount. Coverage availability depends on underwriting, so an exact quote requires a review of your company.
How do I get a quote?
Call The Southern Agency at 1-800-777-1872 or request a quote online for guidance tailored to your software publisher business.