The issue of liability insurance for IT companies is becoming increasingly relevant
For every 3 cases there is a request for advice on liability insurance. And apparently it’s time to figure out what kind of animal it is and who really needs it:
In their daily work, any IT developer faces failures, software errors, bugs, and just unscrupulous employees. In fact, even the most experienced specialists cannot guarantee 100% uninterrupted operation of your software. For such cases, it is desirable for IT companies to have liability insurance.
Company A provided services to company B under the contract, which included the development of customized software for the e-commerce market. The contract spelled out all the nuances scrupulously, including possible failures, bugs, and other. But some time later the customer company discovered a certain error in the system which cost it some financial losses. Company B immediately turned to Company A to recover the financial losses it had suffered due to an error in the software developed by Company A.
Company A had a court case with company B for several months, but in the end it had to compensate for the financial damage caused to company B because of errors in the software it developed. So that’s how it was. Most likely, company A would have it more smooth if the CEO and COO were aware of the possibility of liability insurance.
We decided to talk briefly about what you need to pay special attention to when making insurance.
There are 3 types of insurance of different liability, but in this article we will talk about the most optimal one for the IT business.
The most common options have required coverage from $1 to $5 million. Such insurance can be issued both to a Ukrainian company (with insurance in the hryvnia in a Ukrainian insurance company), and to a European company (in foreign currency, in an international company). Furthermore, if we are talking about insurance for a European company, then the agreements can also prescribe the nuances for the group of Sole Entrepreneurs (FOPs) in Ukraine, who basically perform such work.
The cost of such insurance depends on a number of factors:
- What specific product or service is provided
- The amount of coverage (1.5, 10 million)
- The client’s requirements on what liability should be insured
- The company’s turnover in the last year
- Coverage areas, it may be the whole world, with the exception of the USA and Canada or with the inclusion of the USA and Canada (it will be more expensive)
The cost of such insurance, according to preliminary estimates, can vary from several thousand per year. Some companies provide the ability to split payments into quarterly installments, which significantly reduces the financial burden for entrepreneurs.
Basically, when issuing liability insurance, insurance companies do not impose any special requirements for IT companies. There’s even no need for an audit
Our company provides a comprehensive support package for the liability insurance for IT companies, as well as advice on complex financial and legal issues.
If you have additional questions, please contact us at firstname.lastname@example.org or via the form on the website. We will be happy to answer your questions