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I've got a neighbor who has been trying to sell me insurance for my side business. His claim is that I could be sued by my clients if the software I produce does not perform properly or has bugs in it.

It seems like a pretty broad claim, but I'm wondering about the truth to it. Can I indeed get sued by someone I do work for if bugs are found? If so, to what amount would I be liable?

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closed as off topic by Michael K, FrustratedWithFormsDesigner, rjzii, Aaronaught, Walter Aug 10 '11 at 15:26

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I dunno... what does your contract say about liability about bugs? –  FrustratedWithFormsDesigner Aug 9 '11 at 20:23
Check with a lawyer, not an online message board. –  Malfist Aug 9 '11 at 20:27
Hopefully you won't get sued for hundreds of millions... –  BlackJack Aug 9 '11 at 20:29
It is possible that software developers may benefit from a particular type of liability insurance or particulare agents that specialize in this sort of thing for our industry. Someone on this site may be using this already and provide insight on what to ask for. Just because anyone can get insurance doesn't it make it irrelevant to software contractors. –  JeffO Aug 9 '11 at 20:47
I think many off-the-shelf products have blanket disclaimers saying they are not responsible for anything bad that might happen while you use the software, and that it is provided "as-is", and you use it at your own risk, blah blah don't use it to operate nuclear facilities or life-saving mission-critical equipment blah blah... If you're a free-lancer, you might want to add similar wording to your contracts. And get a lawyer to examine the wording to make sure it will hold up if you do get sued. –  FrustratedWithFormsDesigner Aug 9 '11 at 21:05

3 Answers 3

Errors and Omissions (E&O) insurance is what you seek

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In general, if you are working for yourself in a manner in which you can be sued, having some sort of corporate liability insurance is a good idea, if only because you can get insurance that will pay for any court costs that are associated with being sued and legal defense is usually not cheap.

In terms of acting as a software developer, if you are working independently then it is a good idea for the aforementioned reasons; however, if you are going through an agency you might be covered under their policies. Also, it depends upon how your contracts are written, if you are just providing the coding expertise and someone else is providing the design and other considerations then you might be fairly safe; however, if you design the full product then you could be liable.

As always, this the type of thing you should really talk with a lawyer about though as they are going to know the most about the laws that you need to operate under.

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in the uk professional liability insurance covers this, and as long as you don't produce clinical or financial software the insurance is so cheap why risk not having it? typical cost in uk is $200 which provides 10mil public cover and 1mil professional cover

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