Software Developer Insurance: What you actually need (and what standard cover misses)

This article is general in nature. For advice specific to your situation, book a call with the Pocket team.

The short version

If you write code for clients — freelance, contract, or through a studio — the insurance you most likely need is IT Liability (also called ICT Insurance): Professional Indemnity and Public Liability built for technology work. A generic business policy or a standard PI policy often excludes the exact things a developer gets claimed for. This guide explains what those claims look like, what covers them, and what to check before you rely on a policy.

If you just want cover sorted, our Software Developer Insurance page has the details — or get a quote. This page is the plain-English "what and why."

What does a software developer actually get claimed for?

The risk for a developer isn't usually dramatic. It's the ordinary stuff, such as a piece of work that doesn't do what the client expected, and the client losing money as a result. Common real-world claims:

• A bug causes the client financial loss. Your code has a flaw, it makes it to production, and it costs the client money in the form of lost sales, corrupted data, and downtime.
• The build doesn't do what was contracted. An integration doesn't work as specified, or the finished product misses agreed requirements, and the client claims the shortfall.
• A project runs late. A missed deadline causes the client a loss they pin on you.
• Data gets lost or corrupted. Your system damages or loses client data.
• You're accused of using someone else's IP. You unknowingly used code, a library, or a method that infringes someone's rights.

None of these requires negligence in the dramatic sense. A good developer having a bad day, or a client with a different interpretation of "done", is enough for a claim to be made.

The cover that responds: IT Liability (ICT Insurance)

For a software developer, the core cover is IT Liability, and it's built on two things:

Professional Indemnity (PI) — the main one. This is what responds when your professional work causes a client a financial loss: the bug, the failed build, the missed deadline, the data corruption. Standard PI covers advice errors; ICT-specific PI extends to the technology service failures a developer is usually exposed to. IP protections (like unintentional infringement) usually sit within the PI section too.

Public Liability (PL). Covers third-party injury or property damage connected to your work. It is less central for a developer working from a laptop, but standard in the policy, and often required if you ever work on a client's premises.

Why a standard PI policy isn't enough: a generic PI policy — the kind sold to consultants and advisors — frequently contains explicit exclusions for technology-specific failures. If you're a developer holding a standard PI policy, you may be uninsured for your most likely claim. The tech-specific version is the point.

Products Liability. Relevant if your software is built into physical hardware rather than delivered purely as a service — if a defect causes property damage or injury, this is the section of cover most likely to respond, alongside or instead of PI depending on how the claim arises. It's usually bundled with Public Liability as standard, but your broker can confirm this on your specific policy. Worth checking with your broker whether what you're delivering counts as a product or a service, since that distinction isn't always obvious.

What about cyber?

This is where it gets commonly misunderstood. Cyber cover is not automatically part of an IT Liability policy. Some insurers package it in; many cover PI/PL only, and cyber is arranged as a separate policy.

For a developer, cyber matters if you handle client data, which most do. It covers data breaches, ransomware, and the costs of incident response. If your IT Liability policy doesn't include it, it's worth arranging separately.

One thing worth checking: some IT Liability policies carry a full cyber exclusion. That can cause problems when a claim sits in the grey area between "a coding error" and "a cyber event" — a bug that also exposes data, for example. It's exactly the kind of wording worth having a broker check before you rely on it.

Do I need this if I'm just freelancing?

Short answer: if you have paying clients, probably yes, and often it's not your choice.

• Client contracts frequently require it. Many clients, especially larger ones, won't sign without evidence of PI cover, often specifying a minimum limit ($1M–$5M is common).
• The exposure exists from your first paid job. A bug in a $2,000 project can cause a loss far larger than the project fee. The claim isn't capped at what you were paid.
• Solo developers are covered the same way. The premium reflects the lower revenue and simpler risk — you don't need to be a studio to get cover.

If you're a hobbyist not taking paid work, or you're an employee (your employer's insurance covers you), that's different. But the moment you're contracting or freelancing for clients, the exposure is real.

What to check before you rely on a policy

• Is it ICT-specific, or a generic PI policy? Generic PI often excludes tech failures. This is the big one.
• Is cyber included, or separate? If it's not in the IT Liability policy, arrange it, especially if you hold client data.
• Is there a full cyber exclusion? Check the wording. It's the trap that catches people at claim time.
• Does the limit match what your contracts require? If a client contract specifies $5M and your policy is $1M, you have a gap.
• Is IP infringement covered? It usually sits within the PI section, but confirm on your specific policy.

Get covered

If you write software for clients, IT Liability is the cover that actually responds to your most likely claims.

See Software Developer Insurance → the cover, the details, and how to get started.

Read the full ICT & SaaS insurance guide → if you're scaling, raising, or want the complete picture.

Or talk to the Pocket team — no obligation.

With Pocket is a business name of Insurance Services Holdings Pty Ltd (ABN 36 612 629 295, AFSL 491165). Member of NIBA. Part of the Steadfast Group. This article is general in nature and does not take into account your objectives, financial situation or needs. It is not personal advice. Before acting on any information here, consider whether it is appropriate for your circumstances and read the relevant Product Disclosure Statement.