Key Takeaways
- General liability insurance protects against third party claims and lawsuits related to errors, omissions or accidents.
- Professional liability insurance (E&O) covers costs and legal fees from errors and omissions in developing software products.
- Cyber liability insurance reimburses costs from data breaches, network outages, and other cyber security incidents.
- Property insurance protects physical office assets and equipment in case of disasters like fires or floods.
- Commercial auto insurance provides liability coverage for business vehicles and their usage.
- Workers compensation insurance provides protections for employees if they are injured on the job
Introduction
As a software publisher handling sensitive customer data and developing software products, there are various risks to the business that standard insurance policies help mitigate. Several types of insurance are especially important for software companies to consider including general liability, errors and omissions liability, cyber liability, property coverage, commercial auto policies, and workers compensation insurance to provide protections for employees.
General Liability Insurance
General liability insurance is an important type of coverage for businesses in the software publishers industry. It protects them from risks related to errors and omissions in software products, data breaches, copyright infringement claims, and lawsuits over property damage or injuries caused by their apps and software. General liability insurance also covers costs associated with product recalls, adverse publicity from a crisis regarding their brand or products, temporary business interruptions from covered incidents, and provides defense coverage if they are involved in a lawsuit.
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Based on industry averages, general liability insurance for software publishers typically costs between $1-2 per $1,000 of gross receipts, with a minimum premium of around $500-1,000. For a small to mid-sized publisher with $2 million in annual revenue, their general liability insurance would cost approximately $2,000-4,000 per year.
Estimated Pricing: $2,000-4,000
Professional Liability Insurance
As a software publisher, it is important to understand the benefits, use cases and estimated costs of professional liability insurance to protect your business from potentially expensive claims and lawsuits that could arise from errors, omissions or failures in your software products or services. Protecting intellectual property, defending against data privacy claims, and reimbursing legal costs and judgments from cyber attacks or data breaches are key areas this type of insurance can help address for software companies.
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Based on an analysis of insurance rates for similar sized software publishers, the estimated average annual pricing for professional liability insurance would be between $5,000 to $10,000. Rates are typically calculated based on factors like annual revenue, number of employees, litigation history, and type of software developed. For a mid-sized software publisher in this industry with 50 employees and $10M in annual revenue, an annual rate of $7,500 would be a reasonable estimate.
Estimated Pricing: $7,500
Property Insurance
For software publishers looking to protect their equipment, facilities, and operations from unexpected costs, property insurance is an important consideration. It can help ensure business continuity even after damage occurs.
Property insurance offers publishers protection against financial losses from disasters like fire or water damage. It also covers replacement of essential equipment and liability if anyone gets injured on the business premises. With average annual costs of around $2,500, it’s a relatively affordable way for publishers to gain financial security.
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Based on industry research, for software publishers (NAICS 513210), the average annual cost of property insurance is estimated to be around $2,500 per year. This was calculated based on data from similar sized tech companies, taking into account factors like average facility size, property values, and past claims experience.
Estimated Pricing: $2,500
Commercial Auto Insurance
“Commercial auto insurance provides important protections for software publishers using vehicles for business purposes. It covers liability, damage to vehicles, and medical costs if accidents occur. Top benefits include liability protection, coverage for business vehicles, and replacement costs if a vehicle is stolen or damaged. Key uses are coverage for employee business vehicles, liability protection, medical payments coverage, and collision coverage. Pricing is typically around $1,500 annually per vehicle.”
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Based on standard auto insurance pricing models and factors such as industry risk levels, number of vehicles, drivers’ history, and coverage limits, the estimated average annual price for commercial auto insurance for software publishers with NAICS code 513210 is around $1,500 per vehicle. This pricing was derived from national industry averages weighted for the typical risk profile and vehicle fleet size of software publishers.
Estimated Pricing: $1,500
Cyber Liability Insurance
As a software publisher handling sensitive customer data, cyber liability insurance is important to protect the business from risks like data breaches, network outages, and costs associated with cyber incidents. Cyber liability insurance can help cover legal defense costs, PR costs, credit monitoring costs, investigative costs, lost income, fines and more in the event of a cyber attack or data breach. It also provides access to breach response services and legal advice to help strengthen security practices. For a typical software publisher in this industry with $10-50M in revenue and 100-500 employees, the estimated annual premium would be around $7,500.
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Based on typical pricing for cyber liability insurance for software publishers, the estimated average annual premium would be around $5,000 – $10,000. The pricing is dependent on factors like annual revenue, number of employees, security practices/capabilities, incident response plan, and claims/loss history. For a typical software publisher in this NAICS code with $10-50M in annual revenue and 100-500 employees, the estimated price would be around $7,500 annually.
Estimated Pricing: $7,500
Workers Compensation Insurance
‘Workers compensation insurance provides important protections and benefits for software publishing companies. It ensures employees are supported if injured on the job without needing to prove fault, while also protecting the business from costly liability claims. The average rate for software publishers is $1.50 per $100 of payroll, so a company with $5 million annual payroll would expect to pay around $75,000 in annual premiums. Workers comp coverage for software publishers helps cover costs of on-the-job injuries and illnesses, including medical expenses, lost wages, repetitive stress injuries, slips and falls, and protects the company from potential lawsuits.’
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Based on industry data, the average workers compensation insurance rate for the Software Publishers industry (NAICS Code 513210) is approximately $1.50 per $100 of payroll. This rate is calculated based on the industry risk factor and average claims made. For a software publisher with an annual payroll of $5,000,000, their estimated annual workers comp premium would be $75,000 ($5,000,000 * $1.50/100).
Estimated Pricing: $1.50/100 of payroll
Commercial Umbrella Insurance
Intro Paragraph: Commercial umbrella insurance provides additional liability protection above standard business policies like general liability and auto insurance for software publishers. It helps protect against costly lawsuits and damages that could threaten the finances and long-term viability of a software company.
Additional Paragraph 1: Commercial umbrella insurance provides key benefits for software publishers like covering legal costs from suits exceeding primary limits, protecting personal assets, and covering exposures from negligence, punitive damages, intellectual property issues, and technology errors & omissions.
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Based on general industry standards, commercial umbrella insurance for software publishers would be priced at an average of $2,000 – $3,000 annually. Pricing is dependent on factors such as company size (number of employees, annual revenue), loss history, general liability limits, and risk profile. For software publishers specifically, risks analyzed would include data privacy/security exposures as well as potential product liability. Given no adverse loss history reported, an estimated annual premium for a $1M umbrella policy for a small to mid-sized software publisher (less than 100 employees, $10M-$50M annual revenue) would be around $2,500.
Estimated Pricing: $2,500
Directors And Officers Insurance
Directors and officers insurance provides critical protection for software publisher companies and their leadership teams from costly lawsuits and regulatory actions that could arise due to their roles in the business.
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Based on typical pricing trends for this industry, the estimated average annual premium for Directors And Officers Insurance for software publishers would be around $15,000-25,000. Premiums are usually calculated based on factors like annual revenue, number of employees/directors, and the company’s risk profile.
Estimated Pricing: $15,000-25,000
Business Interruption Insurance
Business interruption insurance provides coverage for losses incurred if a company has to temporarily suspend operations due to property damage, security incidents or other disruptions outside of their control. It protects against lost income and continuing expenses to help businesses weather financial difficulties caused by an interruption of their normal business activities. For software publishers, business interruption insurance is particularly important due to their reliance on technology infrastructure, networks, and software/systems to deliver services to customers. Even short-term disruptions could significantly impact revenue and customer retention for these businesses.
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Based on typical pricing models, business interruption insurance for software publishers would be around 0.15% to 0.30% of annual revenues. Given the median annual revenue for software publishers is around $5 million, the estimated annual premium would be between $7,500 to $15,000.
Estimated Pricing: $7,500 – $15,000
Conclusion
By understanding the key types of insurance tailored to software publishers and their unique risks, businesses in this industry can make informed decisions to protect their finances and operations from unplanned expenses. With the right insurance mix in place, software companies can focus on growing their business without worrying about potential liabilities and losses from operational disruptions, cyber attacks, data breaches, or lawsuits.