How much does insurance cost for a software or IT company?

Where a software firm’s premium goes

A software company or IT services firm has few of the exposures that drive insurance costs in other trades. It has no job sites and no ladders, and usually no fleet. What it has is code and advice that clients rely on, and client data on its systems. That makes its two biggest liability lines professional liability, which insurers selling to tech firms call technology errors and omissions (tech E&O), and cyber liability. The demand for both comes from contracts, and the limit a contract demands sets the premium.

The other lines are cheaper and more standardized:

• Workers’ compensation is required by state law once you have employees, as for any employer (see the state-by-state rules). Software classes carry some of the lowest official rates in the country (below).
• General liability covers bodily injury and property damage to others. Every public IT contract below asks for it, at $1 million per occurrence or less⁠⁷⁠⁸⁠⁹⁠¹⁰.
• Directors and officers (D&O) becomes part of the budget when outside investors join the board.
• Health insurance is not liability insurance, but in the BLS information industry it costs employers about 17.5 times what they spend on workers’ comp per hour worked (our calculation from June 2026 data)⁠¹⁸.

Tech E&O: what IT firms report paying

No agency publishes E&O premiums. The only per-policy figures come from sellers describing their own customers. ERGO NEXT publishes averages by profession: IT consultants and software developers each pay $90 a month, or $1,080 a year (our calculation). Its median across all professional liability buyers is $25⁠¹:

Insurer- and broker-reported figures from each company’s own customers, as published on its website; not a random sample of all businesses. Figures are rounded as published.

TechInsurance, Insureon’s brand for tech businesses, reports a different cut of its own customers. All E&O buyers come to $88 a month, and IT professionals $110 a month on average, which it attributes to “the high costs associated with data breaches and cybersecurity failures”⁠². Its methodology note says the figures are medians of policies bought by 100,000 customers, most in business five years or less, with fewer than five employees and revenue of about $50,000 to over $200,000⁠².

Scroll the table sideways to see every column.

The two sellers do not disagree as much as the totals suggest. NEXT says 47% of its policyholders spend $25 a month or less, which is why its all-profession median sits far below its IT averages⁠¹. TechInsurance says most of its customers have fewer than five employees⁠², and NEXT notes that a freelance or sole-proprietor IT consultant is likely to pay less than a firm of 10⁠¹. A 40-person SaaS company holding a $5 million limit for a state contract is outside both data sets.

What TechInsurance’s customers choose matters as much as the price. 56% buy $1 million per claim and $1 million aggregate. The next most common choice, at 11%, is $2 million/$2 million, and most pick a $2,500 deductible⁠². Those limits sit far below what several public buyers require of IT vendors. How claims-made E&O policies, retroactive dates and tail cover work is explained on the professional liability page.

Cyber or tech E&O: which one the client means

TechInsurance reports a $129 monthly figure for cyber across all its customers and $179 a month for IT businesses. It explains the gap this way: IT consultants, managed service providers and similar firms “often need tech E&O instead of standard cyber insurance”⁠³. For $1 million cyber limits, its customers’ deductibles range from $1,000 to $2,500⁠³.

The distinction matters in a contract. A cyber policy responds to breaches of your systems and the data you hold; tech E&O answers a client’s claim that your software or service failed. Rhode Island, Idaho and Larimer County all list the two as separate lines with separate limits⁠⁷⁠⁸⁠⁹. Idaho’s schedule adds that a separate cyber policy is not needed if the vendor documents that its cyber cover is part of its professional liability policy⁠⁸. Check the wording before buying two policies, or one. What each covers, and how cyber sublimits work, is on the cyber liability page.

What public IT contracts require

Private customers’ requirements are not published, but government buyers post theirs. Four public documents show the range a software or IT vendor can face:

Scroll the table sideways to see every column.

Three details change what you pay:

1. Limits scale with the data

   Where a Rhode Island vendor handles protected health information or personal information, the cyber limit is the projected number of people in the data multiplied by $25, with a $5 million floor⁠⁷. A vendor holding records on 400,000 people would need $10 million (our calculation). Idaho requires a breach-response sublimit of at least 50% of the cyber aggregate⁠⁸.

2. The minimums are floors

   Rhode Island says coverage “may be increased based on the specific scope of work”⁠⁷. Idaho’s packet says that if the vendor carries higher limits than the minimums, the state is entitled to them⁠⁸.

3. Federal work is narrower than state work

   The FAR insurance clause applies when a fixed-price contract exceeds the simplified acquisition threshold and requires work on a government installation. Contracts needing only a small amount of on-site work, such as a few brief visits a month, need not include it⁠¹¹. A remote software contract may therefore carry no FAR insurance clause at all, while the same work for Rhode Island needs $10 million of combined E&O and cyber limits.

Workers’ comp: near the bottom of every rate schedule

Ohio, Washington and Wyoming run monopolistic state funds and publish the rate itself. Software work falls into some of the lowest-rated classes in all three:

Base rates set by the state fund before experience modification. Ohio and Wyoming charge per $100 of payroll; Washington charges per hour worked, and part is withheld from wages. Other states’ insurers file their own rates; see where rates are published.

• Ohio. The schedule names programmers in one class only: 8803, “computer system designers or programmer – traveling”, at $0.0312 per $100 of payroll. It is the third-lowest rate of Ohio’s 501 classes (our count). Clerical office class 8810 is $0.0466, and clerical telecommuter class 8871 is $0.0549⁠¹². Which class an office-based development team falls under is decided by the Bureau under Ohio’s classification rules; the schedule itself does not name in-office programming. If your staff install or repair hardware at client sites, that is not office work. Ohio’s office machine installation and repair class 5191 is $0.6313, 13.5 times the clerical rate (our calculation)⁠¹².
• Washington. Class 5302 covers computer consulting, programming, software and website development, and internet service providers, including the firm’s own clerical and outside sales staff. It excludes hardware installation and repair for others, which goes to class 4107⁠¹⁴. In 2026, 5302 costs $0.2061 per hour worked and 4107 costs $0.617, three times as much⁠¹³. Clerical class 4904 ($0.2223) lists “programming software” among office duties. It applies only to clerical employees not covered by another class on the employer’s account, and 5302 already includes a software firm’s own clerical staff⁠¹⁴⁠¹⁵.
• Wyoming. Wyoming makes coverage compulsory only for the extrahazardous industries listed in W.S. 27-14-108. Information and professional services are not among them, so a software firm may choose to elect coverage, and an election lasts two years⁠¹⁷. The schedule prices clerical office work (000010) at $0.31 per $100 and computing infrastructure, data processing and web hosting (518000) at $0.19⁠¹⁶.

Washington’s hourly rate hides a fixed component. Of 5302’s $0.2061, $0.1912 is the supplemental pension assessment, which is the same for every class, so 93% of the software rate does not depend on software claims at all (our calculation)⁠¹³. That is why Washington’s office classes look expensive next to Ohio’s when both are converted to a cost per employee.

A worked example, our calculation at 2026 base rates with an experience factor of 1.0, for a firm of 10 developers paid $150,000 each, working 2,080 hours a year:

1. Ohio, class 8810

   $1,500,000 ÷ 100 × $0.0466 = $699 a year⁠¹². Ohio charges a $120 minimum administrative charge when premium falls below $120, so very small payrolls pay that instead⁠²¹.

2. Washington, class 5302

   20,800 hours × $0.2061 = $4,286.88. Up to $0.0976 an hour, or $2,030.08, may be withheld from workers’ pay, leaving the employer $2,256.80⁠¹³.

3. Wyoming, electing coverage under 000010

   $1,500,000 ÷ 100 × $0.31 = $4,650⁠¹⁶. DWS’s proposed 2027 rate for the class is $0.34⁠¹⁶.

Elsewhere, private insurers file rates over rating-bureau loss costs, and the bureaus’ class tables are not published for reproduction. TechInsurance reports $41 a month in workers’ comp for its IT customers, against $54 across all its customers⁠⁴. Most of its customers have under five employees, so the figure says little about a firm with a payroll in the millions. How classes are assigned is covered in the class code guide, and you can price your own payroll with the workers’ comp calculator.

What employers in the information industry spend per hour

The BLS Employer Costs for Employee Compensation survey has no software-only series. Its information industry includes software publishers, but also telecommunications and broadcasting. In June 2026, information employers spent $0.42 per hour worked on workers’ comp, 0.5% of total compensation, compared with 0.9% for all private industry⁠¹⁸. Health insurance cost them $7.37 an hour, 2.1 times the $3.48 private-industry average (our calculation)⁠¹⁸.

Average employer cost per employee hour worked for workers' compensation and for health insurance, averaged across all workers in the group, plus workers' compensation as a percent of total compensation. Group averages mix high- and low-risk jobs, so they are not a premium rate for any single business. U.S. Bureau of Labor Statistics (BLS), National Compensation Survey, June 2026 (2026 Q2), private industry workers, released 9 Sep 2026.

For a tech employer, the budget question is the health plan, not the comp policy. State premium data is on the group health insurance page.

D&O once investors join the board

Venture financing documents are where a D&O requirement can appear. Section 5.1 of the NVCA model Investors’ Rights Agreement (updated October 2025) contains an optional clause that has the company obtain D&O within 90 days of the agreement’s date, with the amount left blank for the parties. The policy cannot be cancelled without board approval, and the company must certify on request that it “remains in effect”⁠⁶.

The only published small-company price is Insureon’s. Its technology customers pay $428 a month, $5,136 a year (our calculation), against $133 a month for all its D&O buyers (page updated July 7, 2026; the page text says “average” and its method note says median). Insureon attributes the gap to large upfront investments that depend on directors’ decisions⁠⁵. How Sides A, B and C split the coverage, and what underwriters look at for a venture-backed company, is on the D&O page.

Pricing direction in 2026

Broker surveys report renewal changes, not prices. The Council of Insurance Agents & Brokers reported average cyber premiums down 3.2% and D&O down 2.1% in the second quarter of 2026. Small accounts across all lines were down 0.5%⁠¹⁹. Marsh reported US cyber rates down 2% and D&O up 1% for the same quarter⁠²⁰. Neither series covers tech E&O separately. All series are on the market trends page.

Building the budget line by line

No source publishes a total for a technology company, and any single “tech package” price mixes firms with very different contracts. Build it from the pieces in this order:

1. Collect the insurance clauses from your contracts and your term sheet

   The highest tech E&O and cyber limits anyone demands set those two lines. Look for separate E&O and cyber limits, breach-response sublimits, and additional-insured wording⁠⁷⁠⁹.

2. Price E&O and cyber at those limits

   The $90 to $110 monthly figures reported for IT firms describe mostly $1 million limits bought by firms with under five staff⁠¹⁠². Ask for quotes at each limit a contract requires rather than scaling the published figures.

3. Compute comp from payroll and the official class

   In a monopolistic state, use the published rate. Elsewhere, multiply payroll by the class rate the insurer quotes, and check that field or hardware staff are not in a clerical or software class, since the year-end premium audit checks payroll by class⁠¹²⁠¹⁴.

4. Add GL at the contract’s limits

   Most of the public contracts above ask for $1 million per occurrence with $1 million or $2 million aggregate⁠⁷⁠⁸⁠⁹.

5. Add D&O when the financing closes,

   at the limit the board sets⁠⁶.

6. Budget the health plan separately

   It will likely be the largest benefit cost per employee, as the BLS figures show⁠¹⁸.

Sources

1. 1
   ERGO NEXT, How much does professional liability insurance cost? (data updated August 2025) Checked 13 Oct 2026 · Back to text ↑
2. 2
   TechInsurance (Insureon), Errors and omissions insurance cost (page modified June 25, 2026) Checked 13 Oct 2026 · Back to text ↑
3. 3
   TechInsurance (Insureon), Cyber liability insurance cost (page modified July 14, 2026) Checked 13 Oct 2026 · Back to text ↑
4. 4
   TechInsurance (Insureon), Workers' compensation insurance cost (page modified May 8, 2026) Checked 13 Oct 2026 · Back to text ↑
5. 5
   Insureon, Directors and officers insurance cost (updated July 7, 2026) Checked 13 Oct 2026 · Back to text ↑
6. 6
   National Venture Capital Association (NVCA), Model Investors' Rights Agreement (updated October 2025) Checked 13 Oct 2026 · Back to text ↑
7. 7
   State of Rhode Island, Office of Accounts and Control, Standard insurance requirements (Schedule A3, Information Technology and/or Cyber/Privacy) Checked 13 Oct 2026 · Back to text ↑
8. 8
   State of Idaho, Department of Administration, Risk Management, Contract insurance language: coverage and limit requirements, FY24 (training packet, Dec. 4, 2023) Checked 13 Oct 2026 · Back to text ↑
9. 9
   Larimer County, Colorado, Purchasing, Insurance requirements: Software as a Service (SaaS) Checked 13 Oct 2026 · Back to text ↑
10. 10
    Acquisition.gov (General Services Administration), FAR 28.307-2, Liability (FAC 2026-01, effective March 13, 2026) Checked 13 Oct 2026 · Back to text ↑
11. 11
    Acquisition.gov (General Services Administration), FAR 28.310, Contract clause for work on a Government installation Checked 13 Oct 2026 · Back to text ↑
12. 12
    Ohio Bureau of Workers' Compensation / Ohio Administrative Code, OAC 4123-17-06, Appendix A: base rates effective July 1, 2026 (private employers) Checked 13 Oct 2026 · Back to text ↑
13. 13
    Washington State Department of Labor & Industries, 2026 hourly rates by risk classification Checked 13 Oct 2026 · Back to text ↑
14. 14
    Washington State Legislature, WAC 296-17A-5302, Classification 5302 Checked 13 Oct 2026 · Back to text ↑
15. 15
    Washington State Legislature, WAC 296-17A-4904, Classification 4904 Checked 13 Oct 2026 · Back to text ↑
16. 16
    Wyoming Department of Workforce Services, Workers' compensation 2026 industry base rates by classification Checked 13 Oct 2026 · Back to text ↑
17. 17
    Wyoming Legislature, Wyoming Statutes title 27, W.S. 27-14-108 (extrahazardous employment) Checked 13 Oct 2026 · Back to text ↑
18. 18
    U.S. Bureau of Labor Statistics, Employer Costs for Employee Compensation, June 2026 (released Sept. 9, 2026) Checked 13 Oct 2026 · Back to text ↑
19. 19
    The Council of Insurance Agents & Brokers (CIAB), Commercial Property/Casualty Market Index, Q2 2026 Checked 13 Oct 2026 · Back to text ↑
20. 20
    Marsh, Global Insurance Market Index: US insurance rates, Q2 2026 Checked 13 Oct 2026 · Back to text ↑
21. 21
    Ohio Bureau of Workers' Compensation / Ohio Administrative Code, OAC 4123-17-26, Minimum administrative charge Checked 13 Oct 2026 · Back to text ↑

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