If an enterprise client asks your software firm for $5M, Technology E&O can meet it with one $5M policy or a $1M to $3M primary plus follow-form excess, depending on size and underwriting.
The short answer
- Software developers can meet a $5M requirement with Technology E&O (Professional Liability made for software firms) as one $5M policy or a primary plus follow-form excess, often when enterprises, banks, health systems or agencies ask.
- Follow form means each excess layer copies the primary policy's terms.
- $5M is very rare online and almost always requires a broker, who can ask several types of insurers for quotes. Morrow can help you find it.
What does a $5M 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, made for software and IT services, often with Cyber (coverage for data breaches and attacks).
The per claim limit is the most a policy pays for one claim. The aggregate is the most it pays for all claims in the policy period. A $5M clause in an enterprise MSA (master service agreement) might read:
Illustrative contract wording
Supplier shall maintain Technology Errors and Omissions insurance with limits of not less than $5,000,000 per claim and in the aggregate, and Network Security and Privacy Liability insurance with limits of not less than $5,000,000 per claim. Limits may be satisfied by primary and excess policies. Coverage shall be maintained for three (3) years after termination.
Illustrative example only. Your contract's wording controls.
- Two limits: $5M in Technology E&O and $5M in Cyber. One shared limit may not satisfy both parts. See Professional Liability vs. Cyber.
- Claims-made: Professional Liability almost always covers claims made and reported while the policy is active, for work after the retroactive date (earliest covered work date).
- Three years after: you would renew every layer with the same retroactive date, or buy an extended reporting period (extra time to report claims after the policy ends).
Who asks software developers for $5M?
Many developers are asked for $1M to $3M. $5M usually appears when your code sits inside something large or regulated:
- Large enterprises whose vendor risk teams may set $5M for vendors with system or data access.
- Banks, insurers and payment firms hiring you to build code that moves money or holds data.
- Health systems and plans buying clinical or claims integrations.
- Government agencies that set $5M in a bid request, called an RFP. See government contracts.
At $3M, one policy or a small primary plus excess is often enough. Above $5M, you may need more layers and a broker ($10M). Morrow can help you find them.
How is $5M built?
A stack of layers is a tower. A primary policy pays first. An excess layer is a separate policy that pays only after the layers below it are used up. "$3M xs $2M" means a $3M layer above the first $2M.
Option 1: one policy
Option 2: $2M primary, excess
Option 3: three layers
Each excess layer should follow form. All layers should share the same retroactive date and policy period.
Many policies pay defense costs (legal bills) inside the limit, reducing what is left for a settlement. A commercial umbrella policy almost never covers Professional Liability, so it usually cannot fill the $5M. If your contract is silent, confirm with the client that primary plus follow-form excess meets the clause.
Good to know
Already have $1M to $3M? Morrow can request new quotes for a $5M primary policy or excess layers, keeping your retroactive date and prior acts coverage (coverage for past work) where the market allows. Report known incidents to your current carrier before switching.
What will underwriters ask for?
- Your services (custom builds, SaaS, integrations) and revenue from each.
- The project behind the request: contract value and what happens if the system fails.
- How you release code: testing, code review, staged rollouts and rollback plans.
- Whether you host systems or hold client data, and multifactor login.
- The MSA: uptime promises, penalties, warranties and any limitation of liability clause (a cap on what you owe a client).
- Loss runs (a report of past claims) and your current policy.
What affects the cost?
- What your software runs. Payments, health records and 24/7 platforms usually cost more.
- Contract promises. Service levels, penalties and broad warranties can raise cost.
- How the tower is built. The primary layer usually costs the most per $1M.
- Claims history and controls. Past claims or weak releases can raise cost.
- Retention and Cyber. A higher retention (what you pay first on each claim) usually lowers premium. A Cyber limit adds cost.
Frequently asked questions
Do I need $5M Professional Liability (E&O) as a software developer?
You need it if your contract requires it. Check the contract for the Technology E&O limit, Cyber limit and term. A hypothetical claim: a release defect stalls a distributor's orders for two days, and the client seeks lost sales.
Is $5M realistic for a small software firm with an enterprise MSA?
It can be, in many cases, for a firm with a clean claims history and sound release practices, though underwriting decides. Revenue and project size matter. A smaller primary plus excess is one common way to reach $5M. Morrow can help you find it.
Can my client be added as an additional insured on my Technology E&O?
Sometimes, but not as a standard feature. Professional Liability protects you, and some carriers may add a client as an additional insured when a contract requires it, only for claims arising from your services. Check your policy wording first. A certificate of insurance (a one-page proof of coverage) shows your coverage, but it usually does not give the client rights under the policy.
How long does it take to get $5M of Technology E&O?
Timing usually depends on how complete your application is and how many layers are needed, so it varies. Sending a complete application and the MSA early helps.
Looking for $5M in Professional Liability? Morrow can help.
Send us the insurance section of your MSA and your current policy. Morrow can review both and request quotes for a $5M primary or a primary plus excess, keeping your retroactive date where the market allows.
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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.