Coverage requirements

Software Development Companies

Professional & Business Services80% completeness
Run gap analysis

Last updated August 2026 · Maintained and reviewed by the Advocate Insurance Consultants coverage research team.

Overview

What an adequately protected Software Development Companies program looks like

Software development firms create and customize computer programs that help businesses and individuals run their operations. They maintain extensive computing equipment and are responsible for the reliability of the code they deliver. Products-completed operations, cyber insurance, inland marine, and property are the leading exposures, including software defects, computer viruses, and valuable equipment concentrations. Auto Liability, General Liability, Worker's Compensation, Fidelity Bond, Physical Property and other essential lines anchor this Advocate Standard profile, which pegs limit, deductible, and carrier-quality benchmarks to the real risk software development companies carry.

Key takeaways

  • Spans 154 published requirements across 47 coverage type-peril pairs.
  • Applies to 2 asset types: Commercial Office Building, Professional Services Firm.
  • Covers 17 coverage types and 18 distinct perils.

At a glance

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Completion score

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10 of 47 WIM pairs required

Coverage tower

Required limits by coverage type and peril

Property9 coverage types

Fidelity Bond

Overall limit$100K

Business Income

Flood≥ Business Income Amount for Buildings in an SFHA
TRIA - Property≥ Business Income Amount
Earthquake≥ Business Income Amount
Named Storm≥ Business Income Amount
Water / Sewer Backup≥ Business Income Amount
Wildfire≥ Business Income Amount
Wind Hail≥ Business Income Amount
Overall limit≥ Business Income Amount

Physical

Flood≥ RCV / Insurable Value of First 2 Floors Above Grade + any Floors Below Grade of Buildings Located in an SFHA
TRIA - Property≥ RCV of Existing Structure / Insurable Value
Earthquake≥ RCV of Existing Structure / Insurable Value
Named Storm≥ RCV of Existing Structure / Insurable Value
Water / Sewer Backup≥ RCV of Existing Structure / Insurable Value
Wildfire≥ RCV of Existing Structure / Insurable Value
Wind Hail≥ RCV of Existing Structure / Insurable Value
Overall limit≥ RCV of Existing Structure / Insurable Value

Builder's Risk

Overall limit≥ RCV of Existing Structure / Insurable Value

Business Personal Property

Overall limit≥ RCV of Existing Structure / Insurable Value

Cyber Business Interruption

Ransomware / Cyber Extortion Property≥ 12-month System-Dependent Business Income Value
Overall limit≥ 12-month System-Dependent Business Income Value

Inland Marine

Fire≥ Value of Property in Care, Custody, or Control / Scheduled Inland Marine Value
Theft≥ Value of Property in Care, Custody, or Control / Scheduled Inland Marine Value
Water Damage≥ Value of Property in Care, Custody, or Control / Scheduled Inland Marine Value
Overall limit≥ Value of Property in Care, Custody, or Control / Scheduled Inland Marine Value

Limited Fungus

Overall limit$15K

Ordinance or Law

Earthquake≥ RCV of Existing Structure / Insurable Value
Flood≥ RCV of Existing Structure / Insurable Value
Named Storm≥ RCV of Existing Structure / Insurable Value
Wind Hail≥ RCV of Existing Structure / Insurable Value
Overall limit≥ RCV of Existing Structure / Insurable Value
Liability8 coverage types

Professional Liability

Overall limit$3M

Auto Liability

Hired & Non-Owned Auto$5M
Owned Auto$5M
Overall limit$5M

Cyber Liability

Network Security Liability$2M
Privacy Liability$2M
Ransomware / Cyber Extortion$2M
Overall limit$2M

Disability Liability

Overall limit$2M

Employer's Liability

Overall limit$2M

Worker's Compensation

Overall limit$500K

General Liability

Overall limit$2M
Assault & Battery$5M

Terrorism Liability

TRIA - Liability$2M
Overall limit$2M

Requirements

Full requirement set for Software Development Companies

Every requirement in the Advocate standard, 154 rows across limits, deductibles, carrier rating, and presence checks. Search and filter to drill in.

Group
Type
Peril

Showing 50 of 154 matching · 154 total

RequirementPerilRequirement typeApplicabilityRequirement
Property › Builder's RiskAcceptable Blanket Builder's Risk DeductibleOverallDeductibleBlanketBlanket Builder's Risk deductible must not exceed $50,000.
Property › Business IncomeAcceptable Blanket Business Income DeductibleOverallDeductibleBlanketBlanket Business Income deductible must not exceed $50,000.
Property › Business IncomeAcceptable Blanket Business Income Earthquake DeductibleEarthquakeDeductibleBlanketBlanket Business Income Earthquake deductible must not exceed 10% of the insured value.
Property › Business IncomeAcceptable Blanket Business Income Named Storm DeductibleNamed StormDeductibleBlanketBlanket Business Income Named Storm deductible must not exceed 5% of the insured value.
Property › Business IncomeAcceptable Blanket Business Income Wind Hail DeductibleWind HailDeductibleBlanketBlanket Business Income Wind Hail deductible must not exceed 5% of the insured value.
Property › Business Personal PropertyAcceptable Blanket Business Personal Property DeductibleOverallDeductibleBlanketBlanket Business Personal Property deductible must not exceed $50,000.
Property › Cyber Business InterruptionAcceptable Blanket Cyber Business Interruption DeductibleOverallDeductibleBlanketBlanket Cyber Business Interruption deductible must not exceed $50,000.
Property › Inland MarineAcceptable Blanket Inland Marine DeductibleOverallDeductibleBlanketBlanket Inland Marine deductible must not exceed $50,000.
Property › Limited FungusAcceptable Blanket Limited Fungus DeductibleOverallDeductibleBlanketBlanket Limited Fungus deductible must not exceed $50,000.
Property › Ordinance or LawAcceptable Blanket Ordinance or Law DeductibleOverallDeductibleBlanketOrdinance or Law deductible must not exceed $50,000.
Property › PhysicalAcceptable Blanket Physical DeductibleOverallDeductibleBlanketBlanket Physical deductible must not exceed $50,000.
Property › PhysicalAcceptable Blanket Physical Earthquake DeductibleEarthquakeDeductibleBlanketBlanket Physical Earthquake deductible must not exceed 10% of the insured value.
Property › PhysicalAcceptable Blanket Physical Named Storm DeductibleNamed StormDeductibleBlanketBlanket Physical Named Storm deductible must not exceed 5% of the insured value.
Property › PhysicalAcceptable Blanket Physical Wind Hail DeductibleWind HailDeductibleBlanketBlanket Physical Wind Hail deductible must not exceed 5% of the insured value.
Property › Builder's RiskAcceptable Scheduled Builder's Risk DeductibleOverallDeductibleScheduledScheduled Builder's Risk deductible must not exceed $50,000.
Property › Business IncomeAcceptable Scheduled Business Income DeductibleOverallDeductibleScheduledScheduled Business Income deductible must not exceed $50,000.
Property › Business IncomeAcceptable Scheduled Business Income Earthquake DeductibleEarthquakeDeductibleScheduledScheduled Business Income Earthquake deductible must not exceed 10% of the insured value.
Property › Business IncomeAcceptable Scheduled Business Income Named Storm DeductibleNamed StormDeductibleScheduledScheduled Business Income Named Storm deductible must not exceed 5% of the insured value.
Property › Business IncomeAcceptable Scheduled Business Income Wind Hail DeductibleWind HailDeductibleScheduledScheduled Business Income Wind Hail deductible must not exceed 5% of the insured value.
Property › Business Personal PropertyAcceptable Scheduled Business Personal Property DeductibleOverallDeductibleScheduledScheduled Business Personal Property deductible must not exceed $50,000.
Property › Cyber Business InterruptionAcceptable Scheduled Cyber Business Interruption DeductibleOverallDeductibleScheduledScheduled Cyber Business Interruption deductible must not exceed $50,000.
Property › Inland MarineAcceptable Scheduled Inland Marine DeductibleOverallDeductibleScheduledScheduled Inland Marine deductible must not exceed $50,000.
Property › Limited FungusAcceptable Scheduled Limited Fungus DeductibleOverallDeductibleScheduledScheduled Limited Fungus deductible must not exceed $50,000.
Property › Ordinance or LawAcceptable Scheduled Ordinance or Law DeductibleOverallDeductibleScheduledOrdinance or Law deductible must not exceed $50,000.
Property › PhysicalAcceptable Scheduled Physical DeductibleOverallDeductibleScheduledScheduled Physical deductible must not exceed $50,000.
Property › PhysicalAcceptable Scheduled Physical Earthquake DeductibleEarthquakeDeductibleScheduledScheduled Physical Earthquake deductible must not exceed 10% of the insured value.
Property › PhysicalAcceptable Scheduled Physical Named Storm DeductibleNamed StormDeductibleScheduledScheduled Physical Named Storm deductible must not exceed 5% of the insured value.
Property › PhysicalAcceptable Scheduled Physical Wind Hail DeductibleWind HailDeductibleScheduledScheduled Physical Wind Hail deductible must not exceed 5% of the insured value.
General › AllDo Not Allow Premium FinancingOverallOtherAllPremium-financed insurance is not accepted.
General › AllDo Not Allow Premium FinancingOverallOtherAllPremium-financed insurance is not accepted.
General › AllInsurance Carrier RatingOverallCarrier RatingAllCarrier must have an AM Best Rating that meets the required Letter and Financial Size ratings.
General › AllInsurance Carrier RatingOverallCarrier RatingAllCarrier must have AM Best rating >= A- and size >= VII.
Liability › Professional LiabilityProfessional Liability Scaled to Annual RevenueOverallLimitAllProfessional Liability limit must scale with the firm's size: at least $3,000,000 when annual gross revenue exceeds $10,000,000, and at least $1,000,000 when annual gross revenue is $10,000,000 or less.
Liability › Worker's CompensationStatutory Workers Compensation ConfirmedOverallOtherAllWorkers Compensation must be at statutory limits with Employers Liability.
Liability › Auto LiabilitySufficient Auto Liability - Hired & Non-Owned Auto Excess/Umbrella LimitHired & Non-Owned AutoLimitAllHired & Non-Owned Auto excess/umbrella sublimit must be at least $5,000,000.
Liability › Auto LiabilitySufficient Auto Liability - Hired & Non-Owned Auto LimitHired & Non-Owned AutoLimitAllHired & Non-Owned Auto sublimit must be at least $1,000,000.
Liability › Auto LiabilitySufficient Auto Liability - Owned Auto Excess/Umbrella LimitOwned AutoLimitAllOwned Auto excess/umbrella sublimit must be at least $5,000,000.
Liability › Auto LiabilitySufficient Auto Liability - Owned Auto LimitOwned AutoLimitAllOwned Auto sublimit must be at least $1,000,000.
Liability › Auto LiabilitySufficient Auto Liability Excess/Umbrella LimitOverallLimitAllAuto Liability must carry an excess/umbrella limit of at least $5,000,000.
Liability › Auto LiabilitySufficient Auto Liability LimitOverallLimitAllAuto Liability must carry a combined single limit of at least $1,000,000.
Property › Builder's RiskSufficient Blanket Builder's Risk LimitOverallLimitBlanketBlanket Builder's Risk limit must be at least the RCV / insurable value.
Property › Business IncomeSufficient Blanket Business Income - Certified Acts of Terrorism LimitTRIA - PropertyLimitBlanketBlanket Business Income (Certified Acts of Terrorism) limit must be at least the 12-month business income value.
Property › Business IncomeSufficient Blanket Business Income - Earthquake LimitEarthquakeLimitBlanketBlanket Business Income (Earthquake) limit must be at least the 12-month business income value.
Property › Business IncomeSufficient Blanket Business Income - Named Storm LimitNamed StormLimitBlanketBlanket Business Income (Named Storm) limit must be at least the 12-month business income value.
Property › Business IncomeSufficient Blanket Business Income - Water / Sewer Backup LimitWater / Sewer BackupLimitBlanketBlanket Business Income (Water / Sewer Backup) limit must be at least the 12-month business income value.
Property › Business IncomeSufficient Blanket Business Income - Wildfire LimitWildfireLimitBlanketBlanket Business Income (Wildfire) limit must be at least the 12-month business income value.
Property › Business IncomeSufficient Blanket Business Income - Wind Hail LimitWind HailLimitBlanketBlanket Business Income (Wind Hail) limit must be at least the 12-month business income value.
Property › Business IncomeSufficient Blanket Business Income LimitOverallLimitBlanketBlanket Business Income limit must be at least the 12-month business income value.
Property › Business Personal PropertySufficient Blanket Business Personal Property LimitOverallLimitBlanketBlanket Business Personal Property limit must be at least the RCV / insurable value.
Property › Cyber Business InterruptionSufficient Blanket Cyber Business Interruption - Ransomware / Cyber Extortion LimitRansomware / Cyber Extortion PropertyLimitBlanketBlanket Cyber Business Interruption (Ransomware / Cyber Extortion) limit must be at least the 12-month System-Dependent Business Income Value.

104 more requirements

Compliance

Who requires Software Development Companies

  • Software development company insurance is required by the business and enterprise clients who license custom software and embed technology errors and omissions, cyber liability, and general liability minimums in master service and SaaS agreements.
  • Enterprise procurement teams and their brokers verify professional and cyber coverage before onboarding a vendor with access to production systems and data.
  • Investors and venture backers review the insurance program during funding diligence, and lenders financing growth may require it.
  • Platform partners and app-store or cloud providers reference liability terms.
  • Where software touches regulated data, downstream compliance obligations flow through client contracts, making software development company insurance a standard condition of enterprise and channel relationships.

Carrier standard. Carrier must have an AM Best Rating that meets the required Letter and Financial Size ratings.

Advocate runs these checks automatically for the brokers who place professional & business services coverage.

Exclusions

What Software Development Companies does not cover

  • The present program for software development firms carries Auto Liability, General Liability, Cyber Liability, Cyber Business Interruption, Worker's Compensation, a Fidelity Bond, and property lines, but it does not name standalone Professional Liability in the present coverage set, a notable gap for a business responsible for code reliability.
  • Also missing from the program are Directors and Officers Liability and Employment Practices Liability.
  • Written on a claims-made basis, the cyber policy will not pick up incidents before the retroactive date, claims reported after expiration without tail, or prior-knowledge matters.
  • Intellectual property infringement, first-party loss of the firm's own code, and contractual liability assumed beyond the firm's own negligence generally fall outside coverage, and General Liability excludes the software-defect and financial-loss claims most likely to hit a developer.

Risk advisory

Typical coverage gaps in Professional & Business Services

Software development firms carry products-completed operations, cyber, and technology failure as leading exposures, since a software defect, virus, or missed specification can cause significant client loss.

  • The most important step is confirming technology errors and omissions is in force alongside Cyber Liability, because General Liability excludes software-defect and economic-loss claims.
  • Cyber addresses breaches, ransomware, and business interruption, while tech E&O addresses code that does not perform as promised, so developers need both.
  • Align retroactive dates with the firm's history and buy tail coverage before switching carriers.
  • Valuable computing equipment concentrations warrant confirmed property, inland marine, and equipment breakdown limits.
  • As firms raise capital and hire engineers, add Directors and Officers Liability for investor claims and Employment Practices Liability for workforce disputes, and review IP infringement and open-source exposures for endorsement.

FAQ

Frequently asked questions

What insurance do software development companies need?

Software development companies need technology errors and omissions, cyber liability, general liability, and workers' compensation, plus property and inland marine for equipment. Tech E&O covers software defects and missed specifications, cyber covers breaches and ransomware, and property protects valuable computing concentrations. Growing firms should add directors and officers and employment practices liability.

Does general liability cover software defects?

No. General liability excludes the software-defect, missed-deliverable, and financial-loss claims software developers most commonly face. Those exposures require technology errors and omissions coverage, which funds defense and damages when code fails to perform as promised or an implementation causes a client economic harm.

Do software developers need both cyber and tech E&O?

Yes. Software developers typically need both because they cover different risks. Cyber liability responds to attack-driven events such as data breaches, ransomware, and network business interruption, while technology E&O responds to professional failures such as defective code or a project that misses its specifications. Relying on one leaves the other exposure open.

How does the retroactive date affect software E&O claims?

The retroactive date sets the earliest work a claims-made tech E&O policy will cover. Defects in older releases can surface long after delivery, so developers should align the retroactive date with the firm's history, keep coverage continuous, and purchase tail coverage when changing carriers to preserve protection for prior code.

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About this coverage standard

This profile is maintained by the Advocate Insurance Consultants coverage research team, which maintains the Coverage Library benchmarks against the World Insurance Model taxonomy and reviews each standard against live market placements. It is general guidance, not legal or coverage advice. Verify requirements against the actual policy and contract.

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