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Liability insurance for IT companies

We will help you mitigate risks when working with foreign companies

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IT company insurance in Ukraine is still relatively uncommon , but its importance is rapidly growing, especially for businesses working with foreign clients, sometimes in their own international representative offices. International partners place significant emphasis on risk management and require service providers to have appropriate insurance policies.

In 2024, the number of major cyberattacks reached 1,659 cases, highlighting the continuous rise in digital threats. By 2025, global cybersecurity expenditures are projected to reach $212 billion, representing a 15.1% increase compared to 2024.

IT insurance and risk factors for IT companies

Several key risk categories in the IT industry require insurance coverage:

  • Group 1 – Professional Errors and Developer Misconduct. This category includes mistakes or omissions by developers or management. If an error causes financial losses to a client or end-users, the affected party can file a claim or sue the responsible entity. In many cases, legal fees and settlement costs far exceed the initial contract fee paid to the developer.
  • Group 2 – Cyber Extortion, Hacking, and Employee Misconduct. This includes ransomware attacks, hacker breaches, malware incidents, or fraudulent employee actions. If a company’s code, database, or sensitive assets are stolen, it results in ransom demands, financial losses, or operational disruptions. Claims related to negligence or criminal activities by employees working projects also fall under this category.
  • Group 3 – Business Interruption or Project Delays. Every outsourcing IT company faces project delays or workflow interruptions. While contracts often specify a development timeframe, there is always a “bus factor” risk, where key team members leaving a project could lead to contract breaches, legal disputes, and financial penalties.
  • Group 4 – Intellectual Property, Privacy, and Confidentiality Violations. This includes cases of phishing attacks, data leaks, and unintentional breaches of confidential or private information discovered during project development. Such violations often lead to legal claims and financial penalties for unauthorized disclosure.
  • Group 5 – Electronic Equipment Insurance. This covers hardware damage caused by hacking, physical damage, short circuits, or other electronic failures.

Lack of liability insurance in IT: what are the costs?

All IT company risks come with associated expenses, which may arise from legal claims or lawsuits filed by clients or partners:

  • Legal defense costs include court fees, legal representation, expert evaluations, translation services, and other litigation expenses. Since most lawsuits are filed by foreign clients, legal proceedings often take place abroad, requiring significant financial resources
  • Incident investigation expenses: costs related to examining the circumstances of a claim
  • Public relations management: maintaining a positive reputation among clients and partners after an incident
  • Data recovery costs: if critical data is lost due to a professional error, restoring it can be costly
  • Other settlement expenses: addressing professional liability claims to resolve disputes

The cost of legal claims can exceed the total project budget, leading to severe financial and reputational risks for an IT company.

Finevolution’s IT Insurance services

Business structure analysis
Assistance in choosing the optimal insurance package
Selection of an insurance provider
Assistance in negotiations with insurance companies
Risk assessment and financial coverage analysis
Business structure analysis
Selection of an insurance provider
Risk assessment and financial coverage analysis
Assistance in choosing the optimal insurance package
Assistance in negotiations with insurance companies

How much does IT insurance cost?

The cost of IT liability insurance depends on several factors:
  • Type of IT services offered
  • Number and limits of covered incidents in the policy
  • Insurance products purchased
  • Business assets including real estate
  • Company size and revenue
  • Number of employees

Additional factors affecting IT Insurance costs

The cost of IT liability insurance also depends on:

  • This includes both full-time staff and contractors. The more employees you have, the higher the insurance costs for worker compensation, Errors & Omissions (E&O), and Employment Practices Liability Insurance (EPLI)
  • Higher earnings increase the likelihood of lawsuits, leading to higher insurance premium
  • Companies with on-site employees typically pay lower insurance rates than those with remote or traveling workers
  • If your business stores or processes sensitive client and partner information, cyber insurance is essential. Additionally, the number and types of business contracts with clients, investors, and partners impact the policy cost
  • In countries like the U.S., different states have specific insurance requirements, affecting premium rates. In this case, better to use Substance – an organization of real presence of companies, if you work remotely, but want to use the advantages of individual countries or states of the USA.

Does an IT Sole Proprietor (FOP) need Liability Insurance?

A professional liability insurance policy for IT sole proprietors (FOPs) covers legal defense costs and potential financial losses in case of lawsuits. Having insurance enhances trust with international clients and creates new business opportunities.

Given the growing cyber threats and client requirements, Ukrainian IT businesses should consider professional liability insurance as an essential part of risk management.


The Finevolution team is ready to assist. Working hours: Monday – Friday, 9:00 AM – 7:00 PM. For consultation, submit a request via the form below or contact us via Telegram, Viber, or WhatsApp.

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Registration and support of international business in the EU, USA and Asia
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