App Development Business Insurance
Getting insurance for your app development business is essential.
App development businesses need to be protected against common claims involving things that are likely to cause them financial harm, such as personal injury, negligence, and copyright infringement.
For example, if a client could sue your business claiming that you did not produce the agreed-upon app, or a client could slip and fall on your premises.
We’ll help you find the most personalized and affordable coverage for your unique business.
Recommended: Next Insurance is dedicated to matching small businesses with the right policy at the best price.
Best Insurance for an App Development Business
General liability insurance is — generally speaking — one of the most important insurance policies for app development businesses.
Some of the risks general liability insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
While general liability insurance will cover a large array of the risks your business may face, many opt to carry a number of additional policies to ensure maximum protection. Some of these include:
- Commercial property insurance
- Product liability insurance
- Workers’ compensation insurance
- Home-based business insurance
As a business looking for insurance, there are two distinct avenues available for you to choose between:
- Traditional brick-and-mortar insurers: Refers to providers that have a physical storefront and often make use of insurance agents to assist clients. While they are able to offer personalized and reliable insurance, their higher operating costs may equal higher premiums.
- Online insurers: Refers to providers that are purely online-based and take advantage of AI to be able to offer quotes. This enables most of these providers to offer tailored policies at both a faster and cheaper rate due to their generally lower overheads.
Find the Right Policy at the Best Rate
We’ve reviewed and tested the major business insurance providers. Let us help you find the best match for your business.
Cost of General Liability Insurance
The average app developers in America spends between $450-$750 per year for $1 million in general liability coverage.
Compare the average cost of general liability insurance for an app development business to other professional industries using the graph below:
Several factors will determine the price of your policy. These include your:
- Number of employees
- Per-occurrence limit
- General aggregate limit
You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy.
A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.
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Finding the most affordable premium starts with getting accurate quotes from highly rated providers.
Common Situations That General Liability Insurance May Cover for an App Development Business
Example 1: A potential client is visiting your office and trips on a power cord and falls, breaking her wrist. She asks that your business pay for her medical treatment. Your general liability insurance will likely cover this cost.
Example 2: One of your competitors claims that your latest app is built off of code you copied from his app. He files a lawsuit against your company. Your general liability insurance policy would pay for your legal defense and for a settlement if you settle out of court.
Of course, this is not an exhaustive list of perils a general liability insurance policy will cover, and some conditions may result in a particular peril not being covered. It’s always best to talk to your agent in-depth about the specifics of your policy to avoid blind spots in coverage.
Learn more about the risks covered by general liability insurance.
Check out our review of the Best Small Business Insurance Companies.
Other Types of Coverage App Development Businesses Need
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all app developers should obtain:
Commercial Property Insurance
All of the equipment you use to develop apps for your clients, including all of your computer hardware, would be expensive to replace were it to be damaged in a fire or other unexpected event. Commercial property insurance helps pay for the repair or replacement of your business property if it was damaged by a covered event.
Product Liability Insurance
No matter how carefully you design your apps, there is always the possibility that a client could claim that what you made and sold them caused them harm. Were a client to file a lawsuit demanding damages, your product liability insurance would pay for your legal fees and the cost of any settlement.
Workers' Compensation Insurance
If your app development company has any employees (full-time or part-time), you are legally required to carry workers’ compensation insurance. This type of coverage will help compensate your employees in the case that they get injured on the job.
Home-Based Business Insurance
If you run your app development company out of your home, there is a possibility that your homeowner’s insurance would not cover accidents resulting from business activities. Home-based business insurance can be purchased as part of a business owner’s policy or possibly as an extension of your current homeowner’s policy.
Additional Steps To Protect Your Business
Although it’s easy (and essential) to invest in business insurance, it shouldn’t be your only defense.
Here are several things you can do to better protect your app development business:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up an LLC or corporation to protect your personal assets. (Visit our step-by-step guides to learn how to form an LLC or corporation in your state.)
- Stay up to date with business licensing.
- Maintain your corporate veil.
Business Insurance Is the Best Way to Protect Your Business
If you're starting a new business, then you need business insurance. It's as simple as that. The protection offered by an LLC will protect your personal assets, but your business's assets are still open to liability in the case of a lawsuit or other loss.
Be sure that everything you've built is safe by getting business insurance.
App Development Business Insurance FAQ
Can I buy business insurance online for my app development business?
Yes, absolutely. You will need to first get a quote from an online business insurance provider like Next Insurance. Next allows you to then purchase a policy immediately and your coverage will be active within 48 hours.
What is included in a business owner’s policy?
A typical business owner’s policy includes general liability, business interruption, and commercial property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.
What is the difference between business insurance and general liability insurance?
"Business insurance" is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.
Do I need insurance before I start an app development business?
In most cases, yes. Due to how prone to risk app development businesses can be, obtaining appropriate business insurance should ideally be done before operations commence.
Though in some cases, this will be a legal requirement as certain policies may be obligated for legitimate operation (e.g., commercial auto or workers’ compensation insurance).
Will insurance protect my app development business from everything?
Not necessarily. Certain exceptions may be written directly into your app development business insurance policy, and some perils may be entirely uninsurable.
Do I need business insurance if I already have an LLC?
Yes, an LLC is meant to create a legal barrier between your business and your personal assets and credit. If you haven’t formed an LLC yet, use our Form an LLC guide to get started.
An LLC doesn’t protect your business assets from lawsuits and liability– that’s where business insurance comes in. Business insurance helps protect your business from liability and risk.