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[GeoffW]

Does anyone around here buy professional indemnity insurance (or anything like it) for their game development?  In other words, something that will protect you if you get sued by a customer, publisher or IP holder.

I've got a very rough estimate from an insurer who would do it, but it's quite a large figure from my point of view and I'm thinking of turning it down.  I'm also reluctant to set myself up as a limited company because of the paperwork.

What do you do?  Got any scare stories to share?

[nyyjen]

If you intend to work with bigger publishers then they might ask you to have insurance. Otherwise I would not see a reason for a small studio to have it.

It would be cheaper to setup a Limited company, rather than have the insurance I think. If you don't want to do the paper stuff yourself go and get an accountant. They will want some money up front, but still way cheaper than insurance.

[Mittens]

I have insurance for public liability, it's really pricey (by my standards).
I think I'm paying something like $600 a year, and that was apparently the cheapest I could have got. 
I't covers me from any lawsuits based on injury or damage my business may have caused to the public.
But, since, in most cases, you and I will distribute our games through other peoples services eg. Steam, App Store, Google Play etc. they are the ones who have a legal problem if the product causes damage or issues to people or their computer/phones/information.

I mean to say, we aren't the distributor/publisher, these markets/publishers effectively buy our work (for their ~30% commission) to be sold as THEIR OWN products.

[Mustaine]

Professional liability is a huge expense and it's really meant for companies that are doing high profile work for 3rd parties.  Last quote I got for that was nearly 30k a year.  Totally ridiculous.

If you put some code in your game that causes damages under a 3rd party contract, that's where the real exposure comes from since often the publisher might pass damages directly to you with unlimited cap. 

For a small studio, or a one man shop - often the corporate veil (LLC, Corp) is enough protection depending on the kind of products you are making.  If you end up getting sued, usually the cost of a lawsuit is enough to put anybody in the poor house so a typical solution there is to take your football and go home.  This is why you have a corporate veil, to protect you from something like this.

No, not ideal - but often a lawsuit that would hit your professional liability insurance would likely end up having other massive ramifications associated with it, and the suit might be the least of your troubles.