Open Source Risk Management said its supplier-neutral open source insurance would protect users against third-party claims, warning that a Linux user may have to spend up to £1.7m if it was sued for patent infringement.
The company claimed it was a "virtual certainty" that following SCO's lawsuits against Linux suppliers such as IBM and users such as DaimlerChrysler, others would be sued over alleged infringements of intellectual property in open source software.
However, analysts pointed out that major Linux suppliers, including HP, Red Hat and Novell, already offer some form of indemnity against legal claims.
Martin Brampton, director of Black Sheep Research, said that until SCO has won a big case - against IBM or HP - it will have no chance of successfully suing individual users.
A further blow to SCO's claims over Linux came when venture capital firm Baystar announced that it wanted the return of £11m it had supplied to the software firm. According to Brampton, this action suggests that Baystar is not expecting any financial return from SCO's potential lawsuits.
SCO also suffered a setback when IBM asked a judge to throw out the company's attempt to assert intellectual property rights over every version of Unix that IBM has ever produced.
IBM made it clear that it felt confident that SCO had not produced enough evidence to make its case, and promptly issued a counterclaim of patent infringement for Unixware.