Open Source Risk Management Inc has launched what it is claiming to be the world's first open source insurance policy via an agreement with insurance broker and underwriters affiliated with Lloyd's of London.

The New York-based open source risk specialist has teamed up with Lloyd’s underwriter Kiln Plc and Lloyd’s broker Miller Insurance Services Ltd to launch the $10m Open Source Compliance Insurance Policy.

The policy is designed to protect users and developers against potential risks involved with the use of open source software as part of internally developed applications. OSRM provided the example of trading tools created using open source software components and then distributed to external partners or suppliers.

If the code used had be GNU General Public License code, the distribution of that trading tool would then mean that the entire code base would have to be made available under the GPL.

The insurance policy would provide coverage of up to $10m for the impaired valuation of an acquisition agreement as a result of the requirement to distribute code under an open source license, as well as the loss of profits resulting from any settlement preventing the sale of the product, and the cost of replacing open source code to prevent against losses.

Not every company using open source is exposed to risks associated with license infringement, but as adoption rapidly increases it is critical that companies take licenses seriously and fully understand what constitutes violation, said Daniel Egger, CEO of OSRM.

The company was set up in March 2004 in the wake of concerns over legal-risks associated with open source software following SCO Group Inc’s claims that the Linux operating system included copyrighted Unix code.

Having analyzed the Linux code base, OSRM declared it safe in April 2004 and launched its legal indemnification insurance package, as well as risk assessment and migration consulting, compliance audits, and best-practice development.

Concerns over the Linux code base have waned since then, and it is interesting to note that the new insurance policy covers the misuse of open source code in supposedly proprietary products, rather than the use of proprietary code in open source products.

According to, there have been 30 examples of out-of-court settlement agreements in the past 16 months related to non-compliance with the GNU General Public License.

Meanwhile, the Software Freedom Law Center, set up by professor of law and legal history at Columbia Law School and general counsel for the Free Software Foundation, Eben Moglen, to provide pro bono legal services to non-profit open source groups, has appointed two new attorneys. The SFLC was created in February this year and seeded with $4m raised by the open source and Linux promotion consortium Open Source Development Labs to provide services such as best practices, licensing, defense and litigation support, and legal consulting to non-profit open source organizations.

The Law Center has announced that it has hired Karen Sandler and James Vasile to boost its legal and technology expertise.