$1M Professional Liability (E&O) Insurance for App Developers

App development firms asked for $1M in Professional Liability (E&O) usually need $1M per claim, and often a $2M aggregate and Cyber, so check the contract wording.

What does a $1M requirement mean for app developers?

Professional Liability (E&O, short for Errors and Omissions) covers claims that a mistake in your work caused a client a financial loss. For an app developer, think of a bug that breaks checkout after a release. A typical clause looks like this:

• Per claim: the most the policy pays for any one claim. Here, $1M.
• Aggregate: the most the policy pays for all claims in one policy year. Here, $2M. A $1M/$1M policy would not meet this clause. A $1M/$2M policy usually meets either wording. See Professional Liability limits explained.
• Claims-made: Professional Liability almost always covers claims made and reported while the policy is active, for work done on or after the retroactive date (the earliest date of work the policy covers). That is why the clause asks for three years of coverage after final acceptance.
• "Network security and privacy": this is Cyber coverage. If your app stores user accounts, payments or location data, a policy without Cyber may not meet a clause that names it.

Who asks app developers for $1M?

You will often see $1M from:

• Agencies and software firms that subcontract mobile work to you.
• Mid-sized companies building an app for field staff or customers.
• Clinics and health tech firms and schools and public agencies.
• Funded startups and larger retail or hospitality chains.

Enterprise MSAs (master service agreements) often ask for $2M or more in Technology E&O and Cyber. A $1M/$2M policy gives you $1M for any one claim but $2M across the year. A $2M per claim limit raises the most the policy pays on a single claim. See $2M Professional Liability for app developers.

How is $1M built?

At $1M, the limit is usually one primary policy (the policy that pays first). Many app developers buy Technology E&O, a form built for software and IT services. Other firms use a general form. It is often packaged with Cyber, which covers data breaches, network attacks and privacy claims. See Technology E&O vs. Miscellaneous E&O.

A commercial umbrella almost never covers Professional Liability. Professional Liability policies do not automatically include clients as additional insureds (parties the policy also protects). Some carriers may add one, usually only for liability arising from your work. Others will not. A certificate of insurance (a one-page proof of coverage) only shows that a policy exists. It gives the client no rights under it. Check whether your contract asks for additional insured status.

Morrow can review your contract and policy for gaps. Common ones are a missing Cyber part, a low aggregate, or a retroactive date that leaves apps you already shipped uncovered.

What will underwriters ask for?

An underwriter decides whether to offer coverage and on what terms. They usually ask for:

• What you build (consumer apps, business apps, back ends or APIs), and the revenue share for each.
• Whether your apps take payments, store health or financial data, or use outside services.
• Whether you host or maintain apps after launch, and any uptime promises you make.
• How you test, review code and get client sign-off, and whether you sign fixed-price or deadline deals.
• Revenue, prior claims, and your current policy and retroactive date.

What affects the cost?

• Type of app. Apps that move money, handle health data or run daily operations usually cost more than simple content apps.
• Hosting and support. Running apps after launch adds risk.
• Data you handle. More or more sensitive records usually raise the price, especially with Cyber.
• Revenue and claims history. Bigger contracts and prior claims can raise it.
• Aggregate and retention. A higher aggregate usually costs more. A higher retention (the amount you pay on each claim before the policy pays, like a deductible) usually lowers the premium.

Frequently asked questions

What kinds of claims could an app developer face?

Claims usually allege that a mistake in your work caused a client a financial loss. Hypothetical examples: an update breaks an ordering app over a holiday weekend, and the client says it lost sales. A code error makes a booking app double-charge customers.

Do I need Cyber as well as Technology E&O?

Often yes, if your apps store user data or connect to client systems, because many clients expect both. Technology E&O covers mistakes in your work. Cyber covers breaches and privacy events. See Professional Liability vs. Cyber.

I have a $1M/$1M policy and the contract asks for $1M/$2M. What now?

Request new quotes for a $1M/$2M policy. Morrow can shop it for you and ask carriers to keep your retroactive date and prior acts coverage (cover for past work) where the market allows. Keep your current policy in force until the new one starts. Report anything that could become a claim to your current carrier before you switch.

What happens if I stop building apps or close my business?

Without active coverage, a claim about an app you shipped is generally not covered, and it can show up years later. An extended reporting period (a "tail") gives you extra time to report claims about past work.

This article is general information, not legal advice or a coverage determination. Coverage depends on the actual policy wording, carrier underwriting and your contract terms.