$10M Professional Liability (E&O) Insurance for Software Developers

For software developers whose client contract asks for $10M, this usually means one primary policy plus excess layers of Professional Liability (E&O), often Technology E&O.

What does a $10M requirement mean for software developers?

Professional Liability (E&O, short for Errors and Omissions) covers claims that a mistake in your work cost a client money. Software firms usually buy Technology E&O, a form written for software and IT services, often combined with Cyber (insurance for data breaches and network attacks). See Technology E&O vs. Miscellaneous E&O. A $10M clause in a master service agreement (MSA) might read:

• Per claim and aggregate: the most paid for one claim, and for all claims in the policy year. Here, $10M/$10M. See limits explained.
• Network security and privacy: this is Cyber coverage. Check whether the clause wants the full $10M for it, or whether your Cyber limit can be lower.
• 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 covered).
• Three years after: this is usually met by keeping every layer in force with the same retroactive date. Where carriers allow it, you can instead buy an extended reporting period (extra time to report claims after a policy ends), which may be limited on excess layers.

Who asks software developers for $10M?

Many software developers are asked for $1M, $2M or $3M. Some enterprise deals reach $5M. $10M is less common. It usually shows up when your code runs something critical.

• Very large enterprises that send the same MSA to every vendor.
• Banks and payment processors hiring you to build systems that move money.
• Large health systems buying software that handles claims or patient records .
• Prime contractors on public IT programs passing their limits down to you.

How is $10M built?

A primary policy pays first. An excess layer is a separate policy that pays only after the layers below it are used up. "$5M xs $5M" means a $5M layer above the first $5M.

Each excess layer should follow form. If one layer adds its own exclusion, a claim could be covered low in the tower but not higher up. Every layer should share the same retroactive date. Many Technology E&O policies pay defense costs inside the limit, so defense spending can reduce what is left for settlements. A commercial umbrella almost never counts toward this limit.

Compared with $5M, $10M often adds at least one more excess layer, and each added carrier asks its own underwriting questions. Whether one policy or several layers is used depends on what the market will offer for your firm.

What will underwriters ask for?

Each carrier in the tower may ask for:

• What you build (custom apps, SaaS, integrations) and the revenue from each.
• Whether your code handles payments, health data or core systems.
• How you ship: testing, code review, rollback plans and client sign-off.
• The MSA asking for $10M, including service levels, warranties and any limitation of liability clause (a cap on what you owe a client).
• Revenue, largest contracts, loss runs (a report of past claims) and your current policy.

What affects the cost?

• What your code touches. Software that moves money or holds sensitive data usually costs more.
• Contract promises. Uptime commitments and broad warranties can raise the price.
• How the tower is built. The primary layer usually costs the most per $1M.
• Claims history and controls. Past claims or weak release practices can raise it.
• Retention and Cyber. A higher retention (like a deductible) usually lowers premium, and adding Cyber adds cost.

Frequently asked questions

Do I need $10M Professional Liability as a software developer?

Only if your contract or client requires it. Check the insurance section of the MSA.

Is $5M enough if my MSA says $10M?

Usually not if the clause says not less than $10M. Confirm with the client that primary plus follow-form excess meets the clause.

What kind of claim could reach $10M for a software firm?

A failure in software that runs a client's core business can reach it. Here is a hypothetical example. A software update you ship to a payment platform fails on a busy holiday weekend. The client says it lost sales and must refund customers, and it sues you for the loss plus its own legal costs. Your actual exposure depends on your contract.

I already have $2M. Can I build up to $10M?

Sometimes, if your revenue, contract exposure and claims history support it. Underwriters decide each layer. Morrow can request new quotes for a higher primary or for excess layers above your current limit, keeping your retroactive date and prior acts coverage (cover for past work done after the retroactive date) where the market allows. Report known incidents to your current carrier before you switch.

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.