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Lets say that Ram is a freelancer app developer and takes a contract for app development for $6K from an institution. With help of his friend Shyam he develops the app and delivers it to the client at their satisfactory level. However, Ram and Shyam want to ensure that the institution they build the app for cannot hold them liable for any fault in the app which got into action five years down the line only and has caused a damage of $100K to the institution.

So, they want to insure their liability by taking and insurance policy. Does something like this exists? If yes, what are such policies generally called.

Please feel free to ask for any further clarification.

PHcoDer
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Insurance for professional mistakes is called errors and omissions insurance, or E&O.

Searching reveals a number of firms offering technology errors and omissions insurance.

The International Risk Management Institute says

Tech E&O policies cover both liability and property loss exposures. Major liability insuring agreements include losses resulting from: (1) technology services, (2) technology products, (3) media content, and (4) network security breaches.

Additional information is detailed in another IRMI article, including why commercial general liability insurance may not be sufficient and why you may need both.

Of course, you need to speak to a licensed insurance agent to determine what is right for you.

user71659
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The more common course is not to insure against the liability but to have limits on liability, warranty disclaimers, and dispute resolution procedures specified in the contract.

David Browne - Microsoft
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