Our Game Launch Was Delayed by Bugs, Client Sued: How E&O Insurance Helped
The Un-squashable Bug That Squashed Our Deadline
My game studio was hired by a major publisher to develop a new mobile game. We had a firm launch date. A week before launch, we found a critical, game-breaking bug. We had to delay the launch by a month, costing the publisher hundreds of thousands in marketing spend and lost revenue. They sued our studio for breach of contract. Our Technology Errors & Omissions (E&O) policy was a lifesaver. It paid for the expensive legal defense and the final settlement, protecting our studio from one catastrophic bug we couldn’t fix in time.
Insuring Your Video Game Studio: Protecting Against Glitches, IP Theft & More
Your Final Boss is a Lawsuit
As a game developer, you spend years fighting final bosses in your games. But in the real world, the final boss for your studio is a lawsuit. It can come from anywhere: a publisher suing over a missed deadline, another studio claiming you stole their art style, or a hacker stealing all your player data. A specialized insurance policy is your ultimate power-up. It’s the shield that defends you, the health potion that restores your finances, and the magic sword that helps you defeat the legal monsters that can destroy your business.
Game Dev Insurance Needs: Tech E&O, IP Liability, Media Liability, Cyber
The Four-Player Co-op of Game Insurance
I explain our studio’s insurance like a four-player co-op game. The first player is Tech E&O, our warrior, fighting claims from bugs and server outages. The second is Intellectual Property (IP) Liability, our mage, defending against claims that we copied another game’s magic. The third is Media Liability, our bard, protecting us if our game’s story defames someone. And the fourth is Cyber Liability, our rogue, protecting our player data from sneaky hackers. You can’t beat the game without the full party; your studio can’t survive without all four coverages.
E&O for Game Developers: Covering Financial Loss from Buggy Code, Server Outages
The Glitch That Erased a Thousand Hours of Gameplay
Our studio launched a new online RPG. A bug in our server code caused a rollback, wiping out a week’s worth of progress for thousands of players. The community was furious. Many demanded refunds for their in-game purchases and subscriptions. The financial loss and reputational damage were immense. Our Technology E&O policy was crucial. It covered the costs of the refunds and a “make good” package of in-game currency we offered to appease the angry player base. It helped us recover from a single, disastrous glitch.
Intellectual Property (IP) Lawsuits: Using Similar Characters, Music, or Code?
“Your Dragon Looks a Lot Like My Dragon”
My indie studio released a fantasy game. A few months later, we were sued by a larger studio. They claimed one of our character designs was “substantially similar” to a character in their game and was confusing players. It was a baseless claim, but we still had to defend ourselves in court. The legal bills were terrifying. Our E&O policy, which had a specific rider for Intellectual Property (IP) defense, was the only reason we could afford to fight. It provided the expert IP lawyers needed to protect our original creation.
Media Liability: Defamation or Privacy Issues Within Your Game’s Content?
The “Satirical” Character That Wasn’t Funny to a CEO
Our game included a villainous, satirical CEO character who bore a slight resemblance to a real-life tech billionaire. We thought it was funny. He didn’t. He sued our studio for defamation, claiming the character damaged his personal reputation. This isn’t a bug or a copyright issue; it’s a Media Liability claim. Our specialized game developer’s insurance policy included this coverage. It paid the lawyers to defend our creative content, protecting us from a lawsuit that came from our game’s story, not its code.
Cyber Liability: Protecting Player Accounts and Payment Information!
The Hacker Who Stole All Your Gold (and Credit Cards)
My studio’s online game had over 100,000 player accounts, complete with linked credit card information for our in-game store. A hacker breached our database and stole it all. The fallout was a nightmare. Our Cyber Liability policy was essential. It paid for a forensic team to investigate, the cost of notifying every single player, credit monitoring services for all of them, and the massive fines from the credit card companies. Protecting your players’ data is one of your biggest and most expensive responsibilities.
Comparing Insurance Policies Tailored for Indie Studios vs. AAA Developers
The Indie’s Shield vs. the AAA’s Fortress
As a two-person indie studio, our first insurance policy was a simple E&O/Cyber package with a $1 million limit. It was our basic shield. When we grew into a 200-person AAA studio working on a massive licensed IP, our insurance needs exploded. We now needed a $20 million fortress of coverage, including IP liability to protect the license holder, media liability for the complex story, and a dedicated policy for our esports tournaments. The scale of your insurance has to match the scale of your game.
Does Insurance Cover Failure to Deliver Kickstarter/Crowdfunded Game Features?
The Promise You Made to Your Backers
Our indie studio raised $100,000 on Kickstarter to fund our dream game, promising a list of amazing features. Development was harder than we thought, and we realized we couldn’t deliver on a key promised feature. Our backers were furious and started demanding refunds, threatening a class-action lawsuit for “failure to deliver.” This is a very tough claim. A standard E&O policy might not cover it, seeing it as a business failure. You may need a specialized policy endorsement to cover the unique risks of crowdfunding.
Filing a Claim When Your Game is Blamed for Addictive Behavior or Harm?
The Lawsuit That Blamed the Game
The parents of a teenager sued our game studio, claiming our game’s “addictive” mechanics and loot boxes constituted a form of illegal gambling and had caused their son psychological harm. It was a novel and scary lawsuit. We immediately filed a claim with our E&O and Media Liability insurer. They hired a team of specialized lawyers who were experts in this emerging area of video game law. The policy funded our defense, protecting us from a claim about the very nature of our game design.
My Favorite Game Keeps Crashing: Thinking About the Developer’s E&O!
The Rage Quit and the Insurance Claim
I was playing a new online game, and it crashed three times in an hour, causing me to lose my progress. I was frustrated. But then my “insurance brain” kicked in. I realized thousands of other players were probably having the same issue. I thought about the developer’s studio. I knew that at that very moment, their community managers were getting flooded with angry messages, and their leadership team was probably on the phone with their Technology E&O insurance provider, bracing for the financial fallout from all those crashes.
Protecting Your Game Assets and Source Code (Property/Crime/Cyber)
The Day Our Source Code Was Stolen
The most valuable thing my game studio owns is the source code for our upcoming game. A disgruntled former employee managed to steal a copy of our entire code repository. This wasn’t a standard cyber hack. It was an act of employee theft. Our specialized Crime insurance policy, combined with our Cyber policy, was what responded. It covered the cost of the forensic investigation to determine the extent of the theft and the legal fees to go after the former employee.
Insurance Considerations for Using Third-Party Game Engines (Unity, Unreal)
The Engine Bug That Wasn’t Our Fault
Our game, built on a popular third-party engine, had a major performance issue on a specific type of graphics card. It was caused by a bug in the engine itself, not our code. However, our players didn’t know that. They blamed us, and we faced refund demands. Our Tech E&O policy was crucial here. It can provide a defense for us even when the root cause is a flaw in the underlying tools and platforms that we rely on to build our games.
Coverage for Esports Tournaments Hosted or Sponsored by Your Studio?
More Than Just a Game
Our studio decided to host a major esports tournament for our game with a $100,000 prize pool. Our agent told us our standard insurance wasn’t enough. We needed a separate Event Insurance policy. This covered us for things like a spectator slipping and falling at the venue (General Liability), the risk of having to cancel the event (Event Cancellation), and even liability for the prize money payout. Hosting a live event creates a whole new world of physical-world risks.
Video Game Insurance: Leveling Up Your Business Protection
Your Financial Extra Life
In a video game, an extra life gives you a second chance after a fatal mistake. For a game studio, your insurance policy is your financial extra life. When you’re hit with a “game over” event—a catastrophic bug, a massive data breach, a studio-sinking lawsuit—your insurance is what lets you hit “continue.” It gives you the resources to respawn, recover, and get back in the game, instead of having to start all over from scratch.
Crunch Time & Employee Burnout Leading to Errors: E&O Implications
The Buggy Code from the Burnt-Out Coder
The last three weeks before our launch was a brutal crunch. Our lead programmer was working 80-hour weeks. Exhausted, he made a simple mistake in the server code that went unnoticed. That mistake led to a major server outage on launch day. The resulting E&O claim was significant. It was a powerful lesson that employee burnout isn’t just a human resources issue; it’s a major financial and insurance risk factor. Tired, overworked developers make more mistakes, and those mistakes can cost millions.
What if Your In-Game Purchases Fail or Cause Billing Errors?
The Microtransaction That Became a Macro Problem
Our mobile game had an in-game store. A bug in our code caused some players to be double-billed for their purchases. The players were furious and initiated chargebacks. The credit card companies hit us with fines. The whole mess cost us over $50,000. Our Technology E&O policy, which was endorsed to cover financial transaction errors, responded to the claim. It’s a critical coverage if your game’s business model relies on in-game purchases.
Protecting Against Claims of Copyright Infringement for Game Assets
The Asset Store and the Accidental Theft
To save time, our artist bought a 3D model of a sword from an online asset store to use in our game. It turned out the seller didn’t own the rights to that model; they had stolen it from another game. The original creator sued our studio for copyright infringement. Our Intellectual Property (IP) liability policy defended us. It was a hard lesson that you have to be incredibly careful about the provenance of any third-party assets you use in your game.
Coverage for Using Likenesses or Real-World Brands in Your Game?
The “Parody” That Got Us Sued
Our open-world game featured a fast-food chain called “WacDonald’s” with a very familiar-looking golden arch logo. We thought it was a clear parody. The real McDonald’s didn’t find it funny and sued us for trademark infringement. Our Media Liability insurance was what defended us. Using real-world brands, products, or people’s likenesses in your game, even as a joke, is a huge legal risk that requires specific insurance coverage.
Video Game Insurance: Covering the Code, the Content, the Community
The Complete Protection Package
A video game isn’t just a piece of software. It’s a complex product with three key components, and you need to insure them all. You need Technology E&O to protect the code from bugs and outages. You need Media & IP Liability to protect the content—the story, art, and music—from infringement and defamation claims. And you need Cyber Liability to protect your community—the player accounts and data that are the lifeblood of your game. A true game dev policy covers all three.