Company: APPF
Filing Date: 2025-04-24
Form Type: 10-Q
Source: 0001433195-25-000055
Chunk: 15

Company: APPFOLIO INC
Filing Date: 2025-04-24
Form: 10-Q
Item: Part I, Item 1
Chunk 15
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 of the commission paid on such policy.For additional information for insurance reserves, refer to Note 6, Commitments and Contingencies.

11

 6. Commitments and Contingencies

Legal Liability to Landlord InsuranceWe have a wholly owned subsidiary, Terra Mar Insurance Company, Inc., which was established in connection with reinsuring liability to landlord insurance policies offered to our customers by our third-party service provider. We assume a 100% quota share of the liability to landlord insurance policies placed with our customers by our third-party service provider. We accrue for reported claims, and include an estimate of losses incurred but not reported by our property manager customers, in cost of revenue because we bear the risk related to all such claims. Our estimated liability for reported claims and incurred but not reported claims as of March 31, 2025 and December 31, 2024 was $4.0 million and $3.9 million, respectively, and is included in Other current liabilities on our Condensed Consolidated Balance Sheets.Included in Prepaid expenses and other current assets as of March 31, 2025 and December 31, 2024 are $4.0 million and $6.7 million, respectively, of deposits held with a third party related to requirements to maintain collateral for this insurance service.Legal Proceedings From time to time, we are involved in various investigative inquiries, legal proceedings and disputes arising from or related to matters incident to the ordinary course of our business activities, including actions with respect to intellectual property, employment, labor, regulatory and contractual matters. Although the ultimate outcome of such investigative inquiries, legal proceedings and other disputes cannot be predicted with certainty, we do not believe that any such investigative inquires, legal proceedings and other disputes, if determined adversely to us, would, individually or taken together, have a material adverse effect on our business, operating results, financial condition or cash flows.IndemnificationIn the ordinary course of business, we may provide indemnification of varying scope and terms to customers, business partners, investors, directors, officers, and other parties with respect to certain matters, including, but not limited to, losses arising out of our breach of any applicable agreements, intellectual property infringement claims made by third parties, and other liabilities relating to or arising from our services or our acts or omissions. These indemnification provisions may survive termination of the underlying agreement and the maximum potential amount of future payments we could be required to make under these indemnification provisions may not be subject to maximum loss clauses and is