What are the four core insurance coverages a dev shop needs?

Professional liability (E&O), general liability (GL), cyber liability, and workers' compensation. Professional liability is the non-negotiable coverage for dev shops because the primary risk is bad code and missed deadlines.

Why is professional liability the most important coverage for a dev shop?

Most claims in software agencies trace back to the code, not the office. Professional liability covers claims that your work caused financial harm, such as a bug that took down a client's checkout or a missed deadline.

Is workers' compensation required for all US states?

Workers' compensation is state-administered, and Texas lets private employers opt out. Requirements vary by state, so you must check your state agency for specific rules, exemptions, and thresholds.

What triggers the need for specific insurance coverage amounts?

Your first enterprise MSA (Master Service Agreement) often contracts you into specific coverage amounts. If your contract sets specific limits, you should buy to the contract, not below it.

Dev Shop Insurance in the US: What You Need

Dev shop insurance: the 4 core coverages (E&O, GL, cyber, workers' comp) a US software agency usually carries, and the contract or hiring event that triggers each.

This content is general information only and is not legal, tax, financial or insurance advice. Speak to an appropriately licensed professional before acting on it.

Last updated: August 2024.

🎯 A US dev shop of 2 to 20 people typically needs four coverages: professional liability (E&O), general liability, cyber liability, and workers' compensation. Which limits you need is driven mostly by the contract terms your enterprise clients demand. Professional liability for dev shops is the non-negotiable one, because your risk is bad code and missed deadlines, not slip-and-fall.

TL;DR

4 core coverages: E&O (professional liability), general liability, cyber, and workers' comp.
Workers' comp is state-administered, and Texas lets private employers opt out — requirements vary; check your state agency.
The trigger that changes everything: your first enterprise MSA, which often contracts you into specific coverage amounts.

Don't buy yet: Verify your state's workers' comp requirements and talk to a licensed broker before selecting a carrier or binding any policy. This guide helps you scope what to ask for, not what to sign today.

Definition Box

Dev shop insurance is the set of business insurance policies a software agency, dev studio, or consultancy carries to cover claims from its work: professional errors, third-party injury or property damage, data breaches, and employee injury. For a US software agency, the center of gravity is professional liability (errors and omissions), because most claims trace back to the code, not the office.

This is information, not advice. Erni maps what your business change triggers; a licensed broker or agent binds the actual policy.

What insurance does a dev shop need in the US?

Start with four coverages, in this order of priority for a software agency:

Professional liability (E&O / tech E&O) — covers claims that your work caused financial harm: a bug that took down a client's checkout, a missed deadline, a spec you didn't meet. This is the coverage clients name in contracts.
General liability (GL) — covers third-party bodily injury and property damage. Landlords and co-working spaces often require it before you sign a lease.
Cyber liability — covers breach response, notification costs, and liability when customer data you store or process is exposed.
Workers' compensation — covers employee injury and lost wages. This is state-administered; rules, exemptions, and thresholds vary by state.

Many providers bundle E&O and cyber into a single "tech E&O + cyber" policy, which is usually how software agencies buy.

For authoritative baselines, see the U.S. Small Business Administration guide to business insurance (accessed August 2024), the NCCI overview of state workers' compensation systems (accessed August 2024), and — for the Texas exception specifically — the Texas Department of Insurance workers' compensation page (accessed August 2024).

Methodology: coverages are ordered by how often software-agency contracts name them, not by any provider incentive.

The workflow: from signed lease to fully covered in 5 steps

One coverage per step. Carry one input through all five: a 6-person React/Node dev shop in Austin, TX, with one enterprise SaaS client on a signed MSA.

General liability — bind at lease signing. When you sign your Austin office or co-working agreement, the landlord will likely require GL naming them as additional insured. Ask a licensed broker for a small-business GL policy at the limits the lease names (commonly $1M per occurrence / $2M aggregate).
Professional liability (tech E&O) — bind before the MSA takes effect. Your enterprise SaaS client's MSA usually names a required E&O limit. Buy to the limit the contract names, through an insurer that writes tech E&O.
Cyber liability — bind alongside or bundled with E&O. Because you store and process client data, add cyber coverage, often bundled as "tech E&O + cyber" from the same insurer.
Workers' compensation — check the Texas exception first. Texas is the one state where workers' comp is not mandatory for private employers. A 6-person Austin shop can legally go non-subscriber, but doing so removes your liability protection against employee injury suits. Confirm your obligations against the Texas Department of Insurance link above before deciding, and ask a broker for a quote tied to your classification code.
Review annually. Reassess at each new enterprise MSA, each headcount jump, and each renewal — contract terms drive the biggest changes.

This is information, not advice. Verify state requirements and talk to a licensed broker before binding any policy.