For app developers asked for $5M by an enterprise client, Professional Liability (E&O) is one $5M policy or a primary plus excess layers, and it often takes a broker. Morrow can help you find it.
The short answer
- A $5M Professional Liability requirement is on the high end for app developers, and it usually comes from banks, health systems and large enterprises where one bad release could affect many users.
- It is one $5M policy or, if one insurer will not write that much, a smaller primary plus excess layers that "follow form," meaning they use the primary policy's terms.
- $5M is very rare online and almost always takes a broker. Morrow can help you find it.
What does a $5M 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. App developers usually buy Technology E&O, which is Professional Liability written for software work. It is often paired with Cyber, which covers data breaches and network security events (see the difference from Miscellaneous E&O). Enterprise clients often set the limit in an MSA (master service agreement), 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 $5,000,000 per claim and $5,000,000 in the annual aggregate, covering applications developed, hosted or maintained under this Agreement. Limits may be satisfied through a combination of primary and excess policies.
Illustrative example only. Your contract's wording controls.
- Per claim and aggregate: the most paid for one claim, and for all claims in a year. Here, $5M each.
- 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 work date covered).
- Primary plus excess: this clause allows it. If yours is silent, confirm with the client that primary plus follow-form excess meets the clause.
Who asks app developers for $5M?
Many app projects ask for $2M or $3M. A $5M request usually reflects the client's exposure, not your firm's size, and it often needs more underwriting than a $2M or $3M clause. It comes from:
- Banks, card issuers and payment firms building mobile banking, wallet or payment apps.
- Health systems and health plans launching patient or telehealth apps.
- Large enterprises whose vendor MSA sets one high limit for every supplier (see MSA insurance requirements).
- Large government IT projects and some prime contractors.
How is $5M built?
A primary policy pays first. An excess policy pays only after the layer below it is used up. "$3M xs $2M" means a $3M layer sitting above the first $2M. Stacked layers are called a tower.
Example A: single policy
Example B: two layers
Example C: three layers
Each excess layer should follow form, adopting the primary policy's terms. Every layer should share the same retroactive date, policy period and named insured (the business covered). A commercial umbrella almost never covers Professional Liability.
If you carry a lower limit today, request new quotes through Morrow for a $5M primary or excess layers, keeping your retroactive date and prior acts coverage (coverage for past work done before the new policy starts) where the market allows.
Good to know
Defense costs can shrink the $5M. Many Professional Liability policies pay defense costs inside the limit, so legal fees reduce what is left to settle a claim.
What will underwriters ask for?
An underwriter (the person who decides whether to offer coverage) may review your firm for each layer. Expect questions on:
- Your largest contracts, and whether each app moves money or holds health data.
- Testing and release: code review, staged rollouts and rollbacks.
- Hosting, uptime promises and security controls such as multifactor login.
- Your client agreement, including fixed-price deals, deadline penalties and subcontractors.
- Revenue by service, loss runs (a report of past claims) and your current policy.
What affects the cost?
- What your apps do. Payment and health apps usually cost more to insure than simple content apps.
- Data volume. More sensitive user records usually raise the price with Cyber.
- How the $5M is built. Splitting the limit between a primary policy and excess layers can change the total cost, and the answer often varies by market.
- Claims history. Past claims can shrink the limit offered.
- Retention. The retention is what you pay on each claim before the policy pays, like a deductible. A higher one usually lowers premium.
Frequently asked questions
Do I need $5M Professional Liability (E&O) as an app developer?
It depends on your contract, and many enterprise clients require it. Hypothetical examples of claims behind that: a payment app update charges customers twice, and the bank sues for refunds. A patient app outage costs a health system money. Policies often exclude bodily injury (physical harm), so read the wording.
Can a small app studio get $5M in Professional Liability?
It can be possible, but it is not assured. It depends on underwriting, revenue, contract size and the market, and some small studios are offered less. A clean claims history usually helps.
Can my client be added as an additional insured on my Professional Liability?
Not automatically. Professional Liability covers your own liability for client claims, and clients usually cannot be added as an additional insured (an extra party named on your policy). Some insurers may offer limited options tied to your work, so ask when quotes are requested. Many clients accept a certificate of insurance (a one-page proof of coverage) listing every layer.
How long does it take to put $5M of Professional Liability in place?
It often takes longer than a $1M or $2M policy because each layer needs underwriting. Each underwriter may ask about your apps and security controls. Sending the contract requirement, current policy and loss runs early usually helps.
Looking for $5M in Professional Liability? Morrow can help.
Send us the insurance requirement from your contract and your current policy. Morrow can review both and request quotes for $5M in Technology E&O, with Cyber as your contract requires, as a single primary policy or a primary policy with excess layers. Terms depend on underwriting.
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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.