Professional indemnity insurance for software developers answers when delivered software does not do what it was contracted to do and the client loses money as a result. It is the cover development contracts name, and the exposure is unusual in that a single defect can be replicated across every user of the product at once.
What a defect costs
A payment routine that miscalculates, a report that produces wrong figures a client acts on, an integration that corrupts records, downtime during a trading period. The loss is the client's business consequence rather than the cost of fixing the code, which is why the sums claimed are so often far larger than the development fee.
Scale, which makes software different
A defect in a bespoke system affects one client. A defect in a product affects everyone using it, simultaneously, and a claim can arrive from several customers at once. Where a policy's limit is in the aggregate for the year rather than per claim, that difference matters a great deal and is worth asking about specifically.
Data, and where cyber cover joins
Development work that touches personal data brings data protection exposure alongside the professional one. A claim after a breach caused by a development error can sit in either cover, so holding professional indemnity and a cyber section with the same insurer is the simplest way to stop the two pointing at each other.
What contracts ask for
A stated professional indemnity limit, often with specific wording about intellectual property infringement and sometimes about breach of confidentiality. Check whether your policy includes an intellectual property section, because a claim that delivered code infringed somebody else's rights is a common development exposure and not always covered as standard.
Questions people ask about professional indemnity insurance for software developers
What does it cover for a developer?
The client's financial loss from delivered software that did not do what was contracted, plus the cost of defending the claim.
Is intellectual property infringement covered?
Not always as standard. Development contracts frequently require it, so check for an intellectual property section rather than assuming.
Do I need cyber cover too?
Where the work touches personal data, yes. A breach caused by a development error can fall in either cover, and one insurer avoids the argument.
Per claim or aggregate?
Ask. A product defect can produce claims from several customers at once, which matters much more under an aggregate limit.