To submit, no, but what about when you pass submission and start selling?

Are you sure you don't need it then?

I've been led to believe you need public liability insurance (UK terminology perhaps), at least, if you are selling anything to the general public as a business. And you are certainly a business if you make an app and sell it to the public at price-per-copy.

Maybe the iPhone app store doesn't ask, but are you breaking the law if you don't have the insurance and get as far as sell your app?