> When the widget you built for me breaks and damages my customer and I end up owing them €1m, I want to be able to recoup at least some of that cost from you.
I'm not sure that follows.
I build something, send it to you. You integrate it, test it, make it production-ready, and ship it. If something breaks in testing, that's pretty normal, and it would be on me to fix -- and presumably contractual agreements would preclude damages at that stage.
If something breaks after you ship it to your own customer, that really ain't my responsibility. If you try to make it my responsibility, it would be a matter for the courts and not a matter for insurance. If you're looking for a quick payout from insurance, or if you think that insurance companies are less motivated to defend claims in court, that's reasonable -- but it's by no means necessary, and certainly not a social good. Insurance sets up incentive problems that ought to be avoided.
it would be a matter for the courts and not a matter for insurance
The specifics of the contract is besides the point. Taking you to court is meaningless unless you also have insurance, since if you're a freelancer or small company there is no way to get any money out of you. You'll just declare bankruptcy and be on your way and we'd still be stuck with the bill, even if it was you that screwed up. You having insurance is insurance for your customers that they have some chance of recompense if you screw them in some sort of way.
I'm not sure that follows.
I build something, send it to you. You integrate it, test it, make it production-ready, and ship it. If something breaks in testing, that's pretty normal, and it would be on me to fix -- and presumably contractual agreements would preclude damages at that stage.
If something breaks after you ship it to your own customer, that really ain't my responsibility. If you try to make it my responsibility, it would be a matter for the courts and not a matter for insurance. If you're looking for a quick payout from insurance, or if you think that insurance companies are less motivated to defend claims in court, that's reasonable -- but it's by no means necessary, and certainly not a social good. Insurance sets up incentive problems that ought to be avoided.