Insurance for Mobile App Developers

Raise your hand if you remember playing Snake on your old Nokia phone. (Okay, so we might be dating ourselves here, but we know we’re not the only ones who played it.) For those who remember the game, did you know that many consider Snake to be the first mobile app? The game may have been incredibly simplistic, but it started a phenomenon and introduced a new use for mobile phones. Mobile apps have come a long way since the launch of Snake. In 2021 alone, there were 230 billion mobile app downloads worldwide. The mobile app industry is projected to generate more than $613 billion in revenue by 2025, meaning professional liability insurance for software companies and insurance for mobile app developers will need to protect what’s built.

With so much competition in the mobile app industry, developers have heightened risks. So it’s crucial for anyone involved in mobile app development to understand how to protect themselves and their company from potential exposures. That means having the right insurance coverage.

Let’s take a look at insurance needs for mobile app developers.

What Types of Insurance Do Mobile App Developers Need?

Technology Errors and Omissions Insurance for Mobile App Developers

At some point, we all make mistakes. No matter how careful you are, mistakes happen. It comes with the territory of building a business and, well, being human. And in tech where you’re moving quickly, insurance for mobile app developers helps you stay protected against errors.

While it’s important to acknowledge that mistakes will happen, you also want to ensure that a small error or oversight won’t derail your business. That’s where technology errors and omissions (E&O) insurance comes in. For any tech company, technology E&O should be a top priority when it comes to insurance coverage. 

Suppose a client sues your company because they believe your business made an error or miscalculation in developing their mobile app. In that case, a tech E&O policy will help cover the legal costs. 

For example, let’s say your company created an app for a pizza chain. Everything is working great throughout development, and the client is thrilled. But when it’s released, there’s a bug in the app that adds extra anchovies to every pizza order made through the app. The pizza chain starts losing revenue because of the anchovy fiasco. As a result, the pizza chain decides to sue your company for damages. With errors and omissions insurance, also known as professional liability insurance, your company won’t have to worry about covering steep legal fees. 

Many industries have unique risks and need tailored insurance coverage. And that’s certainly the case with the tech industry. Technology E&O insurance policies are designed to protect companies from the risks most commonly associated with the rapidly growing tech industry. Consider that 95% of all purchases will be made online by 2040 (up from only 18% in 2018), and it’s obvious that tech companies will continue to face unique challenges.

Cyber Liability Insurance for Mobile App Developers

It’s no secret that cyber attacks are becoming increasingly common. According to the Identity Theft Resource Center’s 2021 Data Breach Report, there were 1,862 data breaches last year, easily surpassing the previous record of 1,506 set in 2017. Even more alarming, ransomware incidents surged in 2021, with 623.3 million attacks globally. That’s a 105% increase over 2020 and more than triple the number seen in 2019, according to the 2022 SonicWall Cyber Threat Report. 

While any company can become the victim of a cyber attack, the risk is especially high for tech companies. That’s why cyber liability insurance is another must-have policy for technology companies and is usually coupled with a tech E&O policy. 

Suppose a cybercriminal accessed your database and stole your clients’ sensitive information. A cyber liability insurance policy would cover the costs of investigating the cyber attack, notifying affected third parties, credit monitoring for victims of the breach, and PR efforts if your company suffered reputational damage. Cyber liability insurance will also cover ransom payments in a ransomware attack (FYI, the average ransom demand is now $2.2 million) and civil damages if the victims decide to sue.

It’s important to note that cyber liability insurance will cover the costs of a cyber attack where your company isn’t at fault. But a tech E&O policy covers the costs and losses associated with a cyber attack due to negligence or an error made by your company. 

Cybercriminals are constantly finding new ways to target companies. So even if you have top-notch cybersecurity protocols, cybercriminals can sometimes still find ways to access your database. 

General Liability Insurance for Mobile App Developers

Does your company employ staff? Do you have in-person meetings with clients? If you said yes to either of those, you need general liability insurance. 

Now, you might be thinking, “If I purchase professional liability insurance, why do I need another type of liability coverage?”

The difference is that professional liability, or E&O, insurance provides coverage for financial damages, while general liability insurance protects your company in the event of physical damages. Plus, general liability insurance covers some of the most common and costly claims that businesses encounter, making it well worth the investment.

A general liability insurance policy covers claims of bodily injury that occurred on your commercial property or when using your product and damages to other property. It also covers damages caused by slander, libel, and copyright infringement.

For example, maybe you’re developing a new app for a yoga studio, and the client wants to meet to discuss the progress. The meeting is at your office, and while there, the client slips on a wet floor and breaks their wrist. With general liability insurance, your insurer would take care of the associated medical costs and your legal fees if the client decides to sue. 

But what if the meeting is at your client’s office, and during your presentation you clumsily throw your tablet right into their conference room’s brand new flat screen panel and shatter it? General liability coverage will take care of those damages as well. 

Tip: If you have a small- or medium-sized business, consider purchasing a business owners policy (BOP). BOP offers a bundled package of key insurance policies that most businesses should have: general liability insurance, business interruption insurance, and commercial property insurance. This bundle of insurance policies provides a wide range of coverage but for less than it would cost to purchase each policy separately.

Workers Compensation for Mobile App Developers

Even if your mobile app development company starts as a one-person show, you’ll eventually need to hire staff if you want it to grow. 

You’ll need staff to create code for apps and maintain them. You’ll also probably need customer service or sales reps. Ultimately, you’ll be relying on employees (full-time, part-time, temporary) to help grow your business, and you’ll want to make sure that they’re taken care of if a workplace injury or illness occurs.

Whether you hire one staff member or 30, you need to have workers compensation insurance as soon as you have employees. That’s because workers compensation is mandatory for most employers in every state but Texas. 

A workers compensation policy will cover the short- and long-term costs of an employee’s workplace-related injury or illness, including hospital fees, medication or physical therapy, and even lost wages. So your employee can focus on getting better, and you won’t have to worry about paying for their recovery costs. And considering that the average price tag for compensation claims in 2018-2019 was $42,008, you’ll want to avoid paying out of pocket.

Not to mention that, according to the U.S. Bureau of Labor Statistics, private industry employers reported 2.7 million non-fatal workplace injuries and illnesses in 2020.

What’s more, if an employee decides to sue because of a workplace injury or illness, a portion of your workers compensation coverage should be able to cover your legal expenses. However, in many instances employees give up their right to sue over a workplace injury, knowing they will be compensated through their employers’ workers comp insurance. 

Employment Practices Liability Insurance for Mobile App Developers

Employment practices liability insurance (EPLI) is another type of coverage worth considering as soon as you hire employees.

EPLI protects your business from employment-related lawsuits, such as sexual harassment, discrimination (gender, religion, pregnancy, age, etc.), wrongful termination, retaliation, and other issues. Even if you have anti-discrimination and anti-harassment policies in place, it’s a wise business decision to have this coverage. 

Over the last few years, there have been several high-profile employee liability lawsuits (such as the recent case against Walmart), a trend that has been attributed in part to the #MeToo movement. In the fiscal year 2020 alone, the U.S. Equal Employment Opportunity Commission recorded 67,448 charges of workplace discrimination. 

So while it’s worth protecting your business in case you hire someone with a Mad Men mentality, EPLI also protects against claims covered by Title VII.

Why Do Mobile App Developers Need Insurance?

If you knew that something could potentially jeopardize one of your apps, would you just wait to see what would happen, or would you be proactive and implement safeguards? We’re willing to bet it’s the latter. And if you wouldn’t risk your apps, why risk your business? Insurance for mobile app developers provides the coverage you need,

Listen, we all know that mistakes happen, that sometimes things unexpectedly break, and some of us are just accident-prone klutzes. The reality is, if you’re looking to grow your mobile app development company, at some point, you’re going to run into one (or some) of these incidents. That’s why it’s essential to take steps early on to ensure that a minor oversight or accident doesn’t cripple your business.

Purchasing insurance for your business will give you, your employees, and your clients peace of mind knowing that your company is protected if an unexpected and unfortunate event occurs. That means your company can focus on doing what it’s best at developing mobile apps.