Risk Management and Insurance for Web Developers: A Concise Guide

Web and mobile development are in high demand now. Chances are, you are making good profits.

Just like any other industry, there are risks in the web development industry. The more clients you get, the higher is your risk.

You might be too busy to think about risk.

Don’t worry.

In this article, we will share:

  • Risk Examples in the Web Development Industry; and
  • Risk Management strategies using insurance.

Risk Examples in the Web Development Industry

The first step in any risk management program is to identify your risks. You need to know what you need to manage.

The easiest way to identify risks is to start off with a list of common risks.

Specific to the web development industry, consider the following scenarios:

Incorrect Content at Your Client’s Web Page

You wrote the content at your client’s web page. Before your client’s approval, the page is live.

You are not in your client’s industry. You may not understand the industry practices and lingo.

So, the content might cause your client to misrepresent to their website’s visitors. The misrepresentations can cost your client. And they can hold you responsible for it.

How to prevent incorrect content?

The simplest way is to ask your client to provide the content. If not, always get written approval before making the content live.

Calculation Error in Your Client’s eCommerce Platform

Electronic commerce is growing in popularity. Your client might ask you to develop an eCommerce platform for them.

Certain transaction calculations are not straightforward. This means that error is possible.

These errors might cause your client to charge an incorrect amount.

Their customers would not be happy. Your client will be unhappy too.

If these errors result in your client making losses, they can hold you responsible. You might have to compensate for their losses.

How to prevent calculation error?

There is no way to 100% prevent calculation error. But you can do the following to reduce the chances:

  • Clarify with your client that your logic is correct before writing the code. You should also provide a range of different inputs with the respective outputs.
  • Stress test your formula. Input extreme and normal values and verify the output.
  • Have another person to look through the code. Explain the logic and make sure your code is correct.
  • Perform integration test in a sandbox environment. Most payment gateways like Paypal provides a sandbox environment. Make sure of this environment to ensure the values are correct.

Web Images Copyright Infringement

Most websites have images. Your clients might even provide some of these images.

But, your client might not own the copyright to these images.

So, copyright owners can sue your client for using their images without permission.

Your client can pass the cost of legal actions to you. As a web developer, you have to check web images copyright.

How to prevent web images copyright infringement?

The best way to prevent web images copyright infringement is to use images from public domain.

There are many websites that curate images that are free to use. You also do not need to provide any attributions.

If your client insists on using their images, you can ask them where do they get the images. Something that is taken from their business premise is safe to use.

If not, try doing a Google Reverse Image Search. You will be able to see a list of sites using the same images.

Google Reverse Image Search

The key takeaway:

Always assume you do not have a right to use the image unless proven otherwise.

These are some risk examples in the web development industry. There are much more.

You can use Google to help you identify the major risks in the web development industry.

For example, I search the following keyword:

“risks web development companies”

I got more than 15 million results. Focusing on the top organic results:

Web Development Risk Research

Common Risk Management Strategies

After identifying your risk, your next step is to deal with them.

A popular risk management framework is to classify your risks into the following:

  1. Low Frequency, Low Severity
  2. High Frequency, Low Severity
  3. Low Frequency, High Severity
  4. High Frequency, High Severity

Risk Matrix

Once you have classified them, then you can decide how to deal with the risks.

In this article, we will concentrate on low frequency and high severity risk events. The best way to manage such risks is to transfer them using insurance.

Note: If you are interested in other risk management strategies, please visit our article on corporate risk management framework.

Recommended Insurance for Web Developers

Your insurance needs depend on your business nature. Even within an industry, every business has their specific insurance needs.

In general, we recommend you to consider the following insurance:

Professional Indemnity Insurance

You will need a professional indemnity (PI) insurance if your projects involve financial implications. For example, an eCommerce platform.

If you are only working on portfolio sites, there is nothing much a client can sue you. It might not be realistic to pay the premiums.

For eCommerce platform, your mistakes will cost your client money.

PI insurance will address this. With a PI insurance, the insurance company can indemnify your losses and legal costs.

Public Liability Insurance

Does your client come to your office?

If the answer is yes, you may need to consider public liability insurance.

Imagine this scenario:

Your client comes to your office. He tripped and fell. Not only he is no longer doing business with you, but he is going to sue you.

Public liability insurance protects your business when a member of the public suffers injuries in your business premise.

Work Injury Compensation (WIC) Insurance

If you employed people, you might need WIC insurance. Even then, your employees might also file a claim against you under Work Injury Compensation Act (WICA).

Under WICA, an employee can claim medical expenses and medical leaves if he suffers work-related injuries or sickness.

Office Contents Insurance

What’s your biggest assets in your firm apart from people? Your computers! They are your tools of your trade.

Imagine if a fire broke out in your office. Replacing your computers can cost thousands. Not forgetting the possible digital assets that you have created for your clients.

Office contents insurance indemnifies your business in the event of theft or damages due to fire or natural disasters.

Certain office content insurance is still valid even when the equipment is out of your office.

We recommend any web development company to at least buy the above insurance.


There are risks for every industry. Web development industry is no exceptions. But with proper planning, you can manage most of these risks.

We also provide some recommendations on the type of insurance you should get.

But before you approach the insurance company:

These recommendations are not specific to your business. We need to understand more on your business processes.
Please feel free to contact us for a no-obligation consultations. We love to speak to you!