For software as a service (SaaS) and other software businesses, software startup insurance commonly starts with technology professional indemnity (Tech PI) insurance and cyber insurance. Tech PI insurance is designed to cover claims that your advice, service or work caused a client financial loss. It may include legal defence costs, compensation and any settlement you are legally liable to pay, subject to the policy terms.
Cyber insurance is designed to cover costs after a data breach or cyber attack. First-party costs may include incident response, forensics, notifying affected people and data recovery. Third party cover may respond to claims from customers or regulators.
Each cover is subject to the policy terms, conditions and exclusions. Cover depends on the policy and insurer you choose. Check the policy wording and its terms and conditions for what is and isn't included.
What cover matters at each startup milestone?
Software startup insurance questions tend to arrive with milestones rather than on a fixed timeline, from a first customer to a first overseas contract.
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As at the time of writing (October 2026), Safe Work Australia says: "Under Australian law, employers must have insurance to cover their workers in case they get sick or injured because of work." Each state and territory runs its own scheme, and the laws vary between them.
Why do tech professional indemnity and cyber insurance often come first?
Enterprise customers may ask for both before signing. upcover's Tech PI explainer notes that many enterprise, government and corporate contracts ask technology providers to hold insurance at specified limits before work starts. Some incidents may involve both covers, and our Tech PI vs cyber comparison explains where they meet.
The Australian Signals Directorate's Annual Cyber Threat Report 2024-25 puts the average self-reported cost of cybercrime per report for small business at $56,600. An insurer may ask about your security controls, and upcover's cyber insurance requirements guide explains what underwriters may check.
Does your professional indemnity policy describe implementation work?
If your master services agreement (MSA) includes services your policy schedule doesn't describe, such as implementation work, that gap may surface at claim time. The same Tech PI explainer lists "Work performed outside the disclosed services or territory" among its common exclusions.
Does the Privacy Act apply to a software startup?
As at the time of writing (October 2026), the Office of the Australian Information Commissioner (OAIC) says: "The Privacy Act will generally apply to a start-up once its annual turnover is greater than $3 million." The same OAIC page lists exceptions, such as start-ups "trading in personal information".
How do enterprise customers affect software startup insurance?
Before signing, an enterprise procurement team may send a vendor insurance schedule requiring Tech PI and cyber at specific limits, plus a Certificate of Currency. A Certificate of Currency "confirms that an insurance policy is active for a specific business or project". Our guide to SaaS enterprise insurance requirements explains each request and what to compare before you sign.
Some contracts specify minimum limits; others reference "reasonable and customary" cover. Our guide to Tech PI limits for SaaS companies explains the factors behind a limit, including how one failure may affect many customers.
The same procurement pack may also ask for a SOC 2 report. Our SOC 2 and cyber insurance guide explains that a SOC 2 report gives a customer information about your controls. Cyber insurance is designed to respond to costs and claims after an incident, subject to the policy terms.
If a client is based in a jurisdiction your policy excludes, the policy may not respond to a claim from that jurisdiction. Our guide to insurance for Australian companies with US customers explains territorial and jurisdictional limits.
What contract risks affect insurance for software companies?
Each clause in a client agreement may raise a different SaaS startup insurance question, especially uptime promises, indemnities, liability caps and service descriptions.
Missing an uptime target in an SLA may lead to service credits. A claim that an outage caused the customer to lose revenue is a different kind of exposure. Our guide to SLA breaches and downtime explains how service credits, refunds and damages claims may be treated.
Many software contracts include liability caps. Whether these caps hold, and whether specific carve-outs apply, depends on the contract and the applicable law in each case. Our guide to Tech PI and breach of contract explains indemnities and how a liability cap differs from a specified limit.
Implementation and migration work may also lead to a claim. upcover's startup professional indemnity guide says Tech PI "is commonly considered where the technology itself can cause client loss", including "integration errors" and "implementation issues".
What do professional indemnity and cyber claims look like in SaaS?
Claims examples from upcover's enterprise software and SaaS page include an outage that a client says caused lost revenue and a data breach affecting customers.
| Claim |
Hypothetical claims example |
Is this covered? |
| Software Error Causing Client Loss |
A software update deployed to an enterprise client contains a coding error that causes system downtime for several hours. The client is unable to process transactions and alleges the outage caused lost revenue and additional operational costs. |
Claims arising from errors or omissions in software services may be covered under Professional Indemnity Insurance where the insured is legally liable for the loss |
| Data Breach Affecting Customers |
A cyber attacker exploits a system vulnerability and gains unauthorised access to client data stored on the platform. Affected customers allege failure to protect confidential information and regulatory enquiries follow. |
Claims arising from unauthorised access to data, privacy breaches and related regulatory actions may be covered under Cyber (Network Security & Privacy Liability), where the insured is legally liable |
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Important: These claims are examples only. Cover is subject to policy terms, conditions and exclusions. Policy wordings vary between insurers. Always refer to the policy wording and its terms and conditions for details. If you have questions about a particular possible claim or would like assistance about whether a certain claim might be covered it is always best to speak to an upcover team member or your insurance broker.
If you're concerned about a particular customer service or experience, you can always consider telling your insurer as soon as you become aware of an incident, complaint or circumstance that could lead to a claim. Importantly, this doesn't impact your premiums or cost of insurance until a claim arises, and it means that any future claim is triggered from the original date you notified the insurer, so it helps spread the risk of claims across policy periods too.
You don't need to wait for a formal demand. Also keep in mind that notifying of a claim late may affect your claim.
You can start a claim through the make a claim page. Admitting liability, incurring costs or agreeing to a settlement before you notify your insurer may affect your claim. Starting a claim does not confirm that your claim is covered; your insurer assesses it under the policy terms, conditions, exclusions and limits.
What do tech professional indemnity and cyber policies commonly exclude?
Each policy commonly excludes some losses, so holding Tech PI and cyber insurance may still leave gaps.
Tech professional indemnity
Exclusions commonly include, but are not limited to:
- service credits, liquidated damages and other liability you take on under a contract that would not otherwise exist under the law (contractual liability exclusion)
- claims and circumstances you knew about before the policy started
- physical injury or property damage
Cyber insurance
Exclusions commonly include, but are not limited to:
- intellectual property claims, such as patent or trade secret disputes, although an exception may apply to some software copyright claims
- incidents a senior executive knew about, or could reasonably foresee, before cover started
- outages at third party utilities or telecoms providers, unless the provider's own security failure directly caused them
Important: These lists are not exhaustive. Exclusions vary between insurers. Always refer to the policy wording and its terms and conditions for the exclusions that apply to you, and if you have questions you should speak to your insurance broker or the upcover team.
How much does software startup insurance cost?
Your price may depend on factors including your industry classification, your revenue and the stage of your business. Licensing, professional or contractual requirements may also influence the limit of insurance you consider, which may affect the cost.
upcover's guide to startup business insurance costs explains cost in more detail.
How upcover can help
upcover arranges Tech PI and cyber insurance for software and SaaS startups. upcover works with 80+ insurance partners and can arrange quotes from a range of insurers.
- 70,000+ businesses covered across Australia
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Frequently asked questions
What insurance does a software startup need?
What a software startup may consider depends on its services, data, contracts, team and stage, so there is no single list. You can speak to your insurance broker or the team at upcover about the options for your stage.
What is SaaS insurance?
SaaS insurance is a descriptive term, not a standard policy category. It refers to the combination of covers a SaaS company arranges based on its contracts, data exposure and structure.
Is software startup insurance different for a freelance developer?
SaaS startup insurance and insurance for a freelance software developer often start from similar core covers, such as Tech PI and cyber insurance. A company with staff, enterprise contracts and a larger data footprint may carry broader exposure, which our startup insurance guide explains.
Is Tech PI the same as errors and omissions insurance?
Tech PI is "sometimes called tech E&O" (errors and omissions, a common US term), according to upcover's startup professional indemnity guide. Australian technology businesses may see the equivalent structured as tech professional indemnity, IT liability or another technology liability wording.
Do SaaS companies need cyber insurance?
Cyber insurance is not a general legal requirement for SaaS companies in Australia, but customers may set their own insurance conditions. For example, a South Australian Government guideline lists "Requirements for the supplier to have a level of cyber security insurance" among contract considerations for agencies.
Does a pivot affect tech startup insurance?
A shift from consulting into product delivery, or the reverse, may leave your policy describing a business you no longer run. An upcover team member or an insurance broker can talk through whether your policy schedule still describes your services.
Written by upcover's editorial team. This article provides general information only and does not take into account your objectives, financial situation or needs. It is not legal advice: get legal advice about your contract terms, including SLAs, indemnities, liability caps and insurance clauses, and about whether privacy and employer obligations apply to your business. Legal and regulatory references are as at the time of writing (October 2026). Insurance availability and cover are subject to underwriting and the terms, conditions, limits and exclusions of the relevant policy. Read the policy wording and its terms and conditions before deciding. upcover arranges insurance products with selected insurers and underwriters and does not compare all general insurers or insurance products available in the market.
Official guidance referred to in this article:
- Safe Work Australia: Workers' compensation - https://www.safeworkaustralia.gov.au/workers-compensation
- business.gov.au: Workers' compensation insurance - https://business.gov.au/people/employees/workers-compensation-insurance
- Australian Signals Directorate: Annual Cyber Threat Report 2024-25 - https://www.cyber.gov.au/about-us/view-all-content/reports-and-statistics/annual-cyber-threat-report-2024-2025
- Office of the Australian Information Commissioner: Privacy guidance for startups - https://www.oaic.gov.au/privacy/privacy-guidance-for-organisations-and-government-agencies/organisations/start-ups
- South Australian Government: Cyber security supplier guidance - https://www.security.sa.gov.au/cyber-security/cyber-security-for-suppliers
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