You’re passionate about creating and developing programs to meet the needs of businesses and the public, so you’re starting a software company. This exciting endeavor will take more than just a good knowledge of computer-speak and an ergonomic keyboard to run a successful business. You’ll need to plan properly to keep the profits rolling in along with the orders.
When the time comes to open up shop, having software developers insurance for your business is the key to maintaining smooth operations. All businesses come with risks (even the fun ones), so you’ll need to obtain protection during your preparation phase. Our independent insurance agents are here to help get you set up with the right coverage for your specific needs. But first, let’s talk software.
All about the Software Industry
Estimated revenue of US software publishers (in billion US dollars)
Over the past few years especially, software publishers have experienced quite a surge in demand. The estimated revenue of software publishers back in 2005 was $116.64 billion, and by 2018 it had jumped up to $257.94 — an increase that more than doubled profits in less than 15 years.
Revenue of operating systems & productivity software publishing in the United States (in billion US dollars)
The operating systems and productivity software division of the industry alone has seen its annual revenue increase from $56 billion in 2013 to an estimated $86 billion at the end of 2018.
Worldwide mobile app revenues (in billion US dollars)
Mobile app software development is another niche that has experienced a rapidly increasing demand since the mid twenty-tens. In 2015, revenue for mobile apps totaled $69.7 billion, but by 2020, it’s projected to snowball up to $188.9 billion.
How to Start a Software Company
Your ambition to start a new business is a great motivator, but it’s far from all you need to bring that dream to reality. Of course your vision will be specific and unique (as it should be), but we’ll take a look at some general steps to starting a software company:
- Step One: Planning. No successful business can begin without a solid plan—we’re willing to bet on that. First up, you’ll need to determine all kinds of stuff like your start-up costs, target market, business name, the products and services you’ll offer, and how long it’ll take you to break even and start turning a profit. You’ll also need to decide what kind of business you want to be (i.e., if you want to develop operating systems or mobile apps, etc.). Last, you’ll need to scout out a location, and actually purchase or rent said property, once you’ve found it.
- Step Two: Legal stuff. Next, you’ll decide what kind of business entity you want to be (e.g., LLC, partnership, etc.), and then go through the proper channels for making it legal by registering with the government. You’ll also need to register for taxes and obtain any required permits and licenses.
- Step Three: Money stuff. This phase involves opening a business bank account so you can accurately monitor your business’s financial performance, and it will also make your life a heck of a lot easier when it comes time to file your annual taxes. Then, it’s time to obtain your start-up costs and determine how much you’ll be charging customers/clients for any goods and services your business will offer.
- Step Four: Define and build your brand. What will your business stand for? How do you want the world to perceive it? These are just a couple of questions you’ll answer in order to define your brand. A solid, unique branding of your business will help it stand out from the competition. Once the nitty-gritty has been figured out, it’s time to get to work building that brand. This generally involves designing business cards, building a website, and establishing a social media presence. If you’re clueless when it comes to Twitter or any of the other platforms, you can always hire (or beg) someone to take care of that aspect for you.
- Step Five: Build your team. You’ve made all kinds of progress, and now it’s time to find people to actually do the work. Determine what kind of team you need, the different roles you need to fill and how many positions there are in each, then go about hiring your staff/employees/minions. You can advertise online, in your local newspaper, or go the old-school word-of-mouth route. Once you’ve got a solid team established, it’s time to get them trained.
- Step Six: Iron out the details. For your software company, this could involve ordering supplies needed to perform your services, doing routine maintenance on your computers, determining prices for the services offered and products sold, designing eye-catching signage, putting the finishing touches on your website, perfecting your coding skills, advertising and scouting for clients, etc. Basically, any of the specifics needed to make your software company come to life will fall into this step.
- Step Seven: Get coverage. The final step, and perhaps the most important, is to obtain the proper coverage. You’ll need business insurance to protect not only your software company, but also your employees—and yourself. Business insurance is the pièce de résistance that’ll keep your software company developing cutting-edge programs and apps for years to come.
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What Is Software Developers Insurance?
Chunked down, software developers insurance is a meticulously QA-tested insurance package designed to meet the specific needs of software company owners. All the coverage offered by a basic small business insurance plan, as well as policy options tailored for the unique needs of software developers, are rolled into one.
A software developers insurance package simplifies the process of obtaining all necessary coverages for software company owners while eliminating confusion and stress. Basically, it’s the best way to go.
What Does Software Developers Insurance Cover?
A software developers insurance policy is typically the easiest option when it comes to knocking out your extensive list of coverage needs all together in one tidy package. These policies offer the basics of business insurance coverage, including most of the liability insurance you’ll need, plus specific coverages tailored to your unique niche.
Here are several software developers insurance coverage options:
- General liability: This coverage protects you against property damage or injury claims made by a third party.
- Workers' compensation: If your employees become ill, getinjured, or die from a work-related incident, this aspect of the insurance will cover the financial ramifications. Depending on the type of work being performed, this coverage is often mandatory in most states.
- Property insurance: Covers loss of or damage to your physical property, including your office space, and often the inventory in it. Protected mishaps include fires, storms, and more.
- Cyber risk & privacy liability: Covers the financial losses suffered due to data breaches or other cybercrime events. This can include damage to or loss of customers' sensitive data due to hackers, such as data on their computers or personal payment information that’s stored in your system.
- Professional liability: Provides coverage in the event you make a professional error that causes injury or upset to the public. This could involve making an error that causes corruption to your customers’ data. A special kind of this coverage is required for software developers, but your agent will know what to look for.
- Electronic data processing coverage: This insurance fills in the gaps in regular property insurance by extending to computers, media, and data. This coverage is crucial for software developers.
Your software developers insurance package will be assembled by selecting the coverages that work for your unique business from a big list of available options. Coverage applies to everything from lost business revenue to potential legal/court fees and beyond.
Who Needs Software Developers Insurance?
Whatever the size or operating speed of your software company, if you’re working with sensitive data and paying employees, you’ll need protection. Software development comes with a set of unique risks, both obvious and hidden, so coverage is essential if your business does any of the following:
- Operating system development
- Mobile app development
- Software tool development
- API development
- Cloud computing software development
- Security software development
- Web development
- Embedded system development
Software developers insurance will cover all aspects of your business, regardless of the specific type you own. It’s always important to have protection for your workers, your equipment, your inventory and your property, but protection against potential lawsuits is also crucial. Software companies of all operating systems and programming languages can be sued, so don’t risk not having coverage.
How Much Does Software Developers Insurance Cost?
Truthfully, it depends. On quite a few things. But an average web development company in a mid-sized town might pay $3,500 annually in combined liability insurance, workers’ comp and more. However, a solo mobile app developer in a small town will probably pay much less, while a huge security software company in LA will probably pay much more.
Of course, it’s hard to offer an average figure, since each software company is unique. But really, it all depends on a number of factors, like:
- The type of software company: This involves more than just if you’ll be developing dating apps or the next iOS updates. The kind of equipment your software developers use and the services you offer will affect the risk involved in operations. Obviously, more danger means more money for insurance.
- The location of the software company: Larger cities tend to have higher costs for insurance, but it goes beyond that. Depending on where you are in the country, your location may be subject to various weather-related risks. Software companies along the Atlantic Coast, for example, may have premiums up to 20% higher due to risk of hurricane damage.
- The number of employees: The more you've got, the more workers' comp you’ll need. Simple as that.
- How much business you generate: Premiums are calculated based on business projections for the upcoming year. If your workload doubles, so will your premium, most likely.
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Top 5 Business Insurance Claims
From potential injuries to property damage and lawsuits, business insurance is definitely a must-have. In order to keep all operations running smoothly, you’ll need to consider not only the risks unique to your trade, but also those that apply to all kinds of businesses. Here’s a quick look at the most common business insurance claims across the board:
- Theft/Burglary: Whether they’re after money, merchandise, your company vehicles or anything else, thieves and burglars commonly target businesses. Anything you have that could be stolen is worth protecting—before ever opening your doors to the public.
- Weather-related damage: Windstorms and hailstorms create the type of weather damage most often reported by businesses across the map. Whether it’s shattered windows, broken signage, destroyed products or anything else, Mother Nature can wreak havoc when she gets angry. Plan for disasters before they happen, and secure coverage up front.
- Fire damage: Another common/costly claim is fire damage. Be it destruction caused by natural wildfires or resulting from employee negligence (such as with a kitchen fire), these disasters can be devastating. Fire damage can result in lost property, inventory, and even revenue, especially if your business is forced to close. Also, fires are obviously a huge hazard for your workers and customers alike. Take as many proactive measures as possible, such as installing sprinkler systems and extinguishers.
- Employee injury: Even the most well-trained employees on record run the risk of getting injured on the job, regardless of the line of work they’re in. Employees may be injured while carrying out daily tasks, due to the negligence of a coworker, while making service deliveries, or in a myriad of other ways. Protecting your workers with workers’ comp is crucial, not to mention mandatory in most states.
- Customer injury: Of course, your business’s customers are also at risk of injury while on your property. Slips and falls are some of the most commonly reported business insurance claims, but customers can also be injured due to unsafely stocked shelves, employee negligence, faulty products, and much more.
Top 5 Business Insurance Discounts
Owners of businesses of every size, color, and flavor love scoring discounts however they can. And fortunately, there are some discounts out there to help obtain a significantly lower premium, like:
- The safety discount: Insurance companies love working with clients who put safety first. Put practices in place to keep your employees, equipment, and physical office space as safe as possible, and you're likely to be rewarded by your insurance company. Installing sprinkler systems and burglar alarms are just a couple of examples of easy ways to score this discount.
- The quality discount: Establishing a track record of quality goods, services, and customer interactions will not only keep your business running strong, but also help reduce your insurance costs. Essentially, keeping your clients happy is the key to keeping your insurance company happy, and they just might slash your premium as a thank-you in return.
- The low claims history discount: Along the same lines as maintaining a safe and efficient business, having a low claims record is another way to seriously please your insurance company—and over time they’ll probably reward you for it. Plus, if you ever need to switch insurance policies or companies, having a low or even squeaky-clean claims record will definitely help you land a lower premium.
- The professionalism discount: Sometimes insurance companies send out inspectors to observe your business during a typical day of operation. If your equipment is clean and well-maintained, your employees are following necessary safety protocols, and your customers/clients seem happy, you’ll get a good report. A favorable evaluation could reward you with a reduced premium.
- The bundle discount: Purchasing multiple types of insurance with the same company is a tried and true way to save money, but so is purchasing specialty insurance packages. These packages, made up of multiple policies tailored to a specific kind of business, are designed to save you money—and just generally make life easier. And since they exist, you might as well take advantage.
How to Find the Best Software Developers Insurance
In order to get the protection you need (and deserve), you’ll want to work with a trusted expert. Independent insurance agents will not only know where to find the best coverage and price, but also help to make sense of the fine print.
Consider your business’s unique needs, then connect with an agent to help you take it from there. Have a list of your specific concerns and desires handy before you reach out, to help make the process even smoother.
Compare Software Developers Insurance Quotes with an Independent Insurance Agent
We all know how valuable your time is, so why spend it doing all the hard work yourself? From business insurance packages to special add-on policies, our expert independent insurance agents will help you determine which types of coverage make the most sense for you and your new business.
Our independent insurance agents stay on top of the insurance industry and all the latest discounts so you don’t have to. That means they’ll help find the right coverage at the right price for you.
They’re not just there at the beginning, either. If disaster strikes, your agent will be there to help walk you through the claims process and make sure you are getting the benefits you’re entitled to. Now that’s thinking ahead.
TrustedChoice.com Article | Reviewed by Paul Martin
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