For app developers whose enterprise, bank or health client asks for $3M: your Professional Liability must pay up to $3M per claim and per year, built as one policy or a primary plus excess.
The short answer
- A $3M requirement means your Professional Liability (E&O) must pay up to $3M for a client's claim over your work, usually per claim and per policy year. Enterprise contracts, and apps that move money or hold sensitive data, often trigger it.
- It is often built as one $3M primary policy, or a $1M or $2M primary plus a follow-form excess layer. Confirm with the client that primary plus excess meets the clause.
- $3M is rarely available online and is usually placed by a broker. Morrow can help you find it.
What does a $3M requirement mean for app developers?
Professional Liability (E&O, short for Errors and Omissions) covers claims that a mistake in your work cost a client money. Most app developers buy a form called Technology E&O, often combined with Cyber (coverage for data breaches and network security events), rather than a general Miscellaneous E&O form (see Technology E&O vs. Miscellaneous E&O). A $3M clause may read like this:
Illustrative contract wording
Developer shall maintain Technology Errors and Omissions insurance, including network security and privacy liability, with limits of not less than $3,000,000 per claim and $3,000,000 in the annual aggregate for all applications and services under this Agreement. Limits may be satisfied by a combination of primary and excess policies. If written on a claims-made basis, coverage shall be maintained for three (3) years after termination.
Illustrative example only. Your contract's wording controls.
- Per claim and aggregate: the most paid for one claim, and for all claims in the policy year.
- Claims-made: Professional Liability almost always covers claims made and reported while the policy is active, for work done after the retroactive date (the earliest date of work the policy covers).
- Primary and excess: this clause allows stacked policies. Many do not, so read yours closely.
Who asks app developers for $3M?
Many app projects ask for $1M or $2M. $3M is less common. It tends to appear when a client sets one higher limit for every software supplier. Compared with $2M, $3M usually brings a bigger underwriting review and often a primary plus excess build. It comes from:
- Large enterprises whose vendor MSA (master service agreement) sets one limit for all software suppliers (see MSA insurance requirements).
- Banks, credit unions and fintech firms hiring you to build banking or payments apps.
- Health systems and digital health companies launching patient or telehealth apps (see healthcare vendor Professional Liability).
- Public agencies buying citizen service apps (see government contract Professional Liability).
How is $3M built?
A primary policy pays first. An excess policy pays only after the primary limit is used up. "$2M xs $1M" means a $2M layer that sits above the first $1M.
Example A: single policy
Example B: two layers
Example C: two layers
The excess should follow form, meaning it adopts the primary policy's terms, including its retroactive date. Check that the layers also share a policy period and a named insured (the business the policy covers). A commercial umbrella almost never covers Professional Liability (see does an umbrella cover Professional Liability).
If you carry $1M or $2M today, request new quotes through Morrow for a $3M primary or an excess layer. Morrow can request quotes that keep your retroactive date, so past work stays covered, where the market allows. $3M structures are rarely found online. Morrow can help you find them.
What will underwriters ask for?
An underwriter decides whether to offer coverage and on what terms. At $3M, each carrier in the structure may review:
- Your largest apps and how many users each handles.
- Whether apps take payments, store health or financial data, or connect to a client's core systems.
- Whether you host or support apps, and any uptime promises.
- Your release practices: testing, code review and rollback plans.
- The contract asking for $3M, including fixed-price terms, deadline penalties, indemnity (a promise to repay the client's losses) and any limitation of liability clause (a cap on what you owe a client).
- Revenue, loss runs (a report of past claims) and your current policy.
What affects the cost?
- What the app does. Apps that move money, hold health data or run client operations usually cost more.
- Revenue and contract size.
- How the $3M is built. The primary layer often costs more per $1M of limit than excess does.
- Cyber and data. More sensitive records usually raise the price when Cyber is included.
- Retention, defense terms and claims history. Retention works like a deductible. Technology E&O is commonly written with defense costs inside the limit, so legal fees reduce the $3M. See cost factors.
Frequently asked questions
Do I need $3M Professional Liability as an app developer?
You need it only if your contract or client requires it. It most often comes from enterprise, banking, health or public sector clients. Hypothetical example: a payments app update fails to post transactions for two days, and the lender says it lost customers.
Can a small app development firm get $3M in Professional Liability?
Often, depending on underwriting. Small firms commonly use a $1M or $2M primary plus a follow-form excess layer. A clean claims history usually helps. Morrow can help you find it.
Can my client be added as additional insured on my app developer Professional Liability?
Sometimes, but not on most forms. Additional insured status is not automatic. Where a carrier allows it, it is limited to the client's liability from your services. A certificate of insurance (a one-page proof of coverage) shows your coverage but does not grant that status.
What if my next contract asks for $5M Professional Liability?
Some MSAs step up to $5M for high-risk apps. That limit is very rare online and almost always needs a broker. Morrow can help you find it. See $5M Professional Liability for app developers.
Looking for $3M in Professional Liability? Morrow can help.
Send us the insurance requirement from your contract and your current policy, if you have one. Morrow can review both and request quotes for a $3M primary or a primary and excess structure.
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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.