Working as a freelancer or a consultant can give you the freedom of being your own boss. However, that freedom brings with it personal and professional responsibilities. Professional Indemnity Insurance (PII) may help you better manage any claim from your client that your work resulted in material damage to their business.
If you are in an occupation or profession where you give advice or make recommendations, you may find yourself in the position of having to defend yourself against claims that your negligence, errors or omissions caused your client to suffer financial losses.
PII may typically cover the cost of having to defend yourself against such allegations and will also cover damages awarded against you if the allegations are upheld in court.
This could include losses from:
- breaches of client confidentiality;
- loss of documents or data;
- libel, slander or defamation;
- any infringement, unintentionally, of intellectual property rights;
Not always mandatory
For many professions, professional indemnity insurance may be mandatory. Architects, surveyors, solicitors, accountants etc are just some examples.
Even if PII may be optional in your situation, it may still prove invaluable and not just if there is a dispute with a client.
In a highly competitive job market, having PII cover could give you the edge against another applicant for a position. A prospective client may see PII as a significant factor in your favour.
If you have employees then your PII may typically cover them too for their negligence while carrying out work on your behalf, though do check, as not all professional indemnity insurance policies will offer this cover as standard.
Of course, if you have employees, you may find it valuable to consider what your position would be if they were to sue you for some reason. Some professional indemnity policies may also provide cover for cases such as these.
Public liability insurance
PII may also provide public liability cover.
Public liability insurance may help protect you against claims by third parties of bodily injury or property damage caused by you or your employees a result of your business activities.
Professional indemnity insurance may be optional as far as your particular occupation is concerned. It may, however, prove to be essential to help you operate in today’s litigious business environment with some peace of mind.
One of the required characteristics of a Management Consultant is the ability to ‘look ahead’. Using that skill to think about Management Consultant’s insurance might be worthwhile.
A management consultant (or consultancy) will typically put a lot of effort into building and maintaining a relationship with their client.
However successful that is, commercial relationships can sour in an instant and things may go from bad to worse.
In some circumstances, your client (or ex-client) may decide that your performance has led them to suffer material loss and they may expect to hold you accountable for that legally.
If you are sued under the auspices of professional liability, you may find yourself on the receiving end of claims for damages due to:
- misstatement or misrepresentation;
- unintentional infringement of intellectual property rights;
- the accidental misuse of confidential information;
- a loss of documents;
If the case goes against you, then you may find yourself on the receiving end of very large awards and legal fees.
Typically the professional indemnity insurance component of management consultant’s insurance may help protect you from such costs.
The public and your employees
If you employ staff, in some cases even if they’re friends or family simply ‘helping out’, the law may demand that you have employers’ liability insurance to protect their interests.
By contrast, there is typically no legal requirement to have public liability cover but it may be wise to do so. If a member of the public (e.g. someone on the client’s site) is accidentally injured as a result of your actions, premises or property, they may sue you.
Once again, consultant’s insurance typically may help you deal with meeting such claims.
Is consultant’s insurance essential?
Excluding, possibly, employer’s liability cover, typically you may be under no obligation to take out such insurance protection.
However, some potential clients may demand to see evidence of your management consultant’s insurance before any contracts are awarded. It may be seen as a sign of professionalism, maturity and to some extent, risk reduction for them. By contrast, being unable to provide evidence that you have such cover may be negatively interpreted. Also, with some professions, having PII cover may be mandatory (for example, if you are an accountant).
Obtaining management consultant’s professional indemnity insurance quotes may be relatively easy once you understand why such cover may be required.
Your exposures and risks
Unfortunately, your relationship with your clients isn’t something that can be safely forecast. Things can and do go wrong in terms of professional engagements and when they do, you may find that your client resorts quickly to legal process.
The costs of such actions against you may run easily into very large sums. Even if you win, you may be left with large residual legal fees.
Professional indemnity insurance (PII) typically may help you with some of the potential costs involved.
Typically, the cover available may help cover occurrences such as:
- accidental loss of your clients data or unintentionally breaching their confidentiality;
- product liability claims against you or claims for professional negligence / lack of duty of care;
- an unintentional infringement of intellectual property rights;
It’s worth noting that typically such insurance only operates in circumstances when your infringement or errors (if applicable) arise from circumstances other than intentional criminal activity.
Management consultant’s professional indemnity insurance quotes may illustrate that the premium for such cover is relatively modest when seen against the potential risks you face and the costs you may incur if you are uninsured.
Some cover of this type may even include public liability injsurance protection – in case a member of the public that has suffered injury as a result of your activities, products or property, sues you.
Employers’ liability insurance
In many situations, if you have staff working for you, the law may oblige you to provide employers’ liability cover. This covers the costs arising from any accidents or injuries your staff may sustain in the course of their legitimate activities on your behalf.
Surprising as it may sound, the law does not define employees as being only those that have a contract of employment. In some cases, even people that are helping you on a voluntary basis may have the right to sue you for compensation.
Looking at what’s available by way of employers’ liability insurance cover when seeking management consultant’s professional indemnity insurance quotes, might be a sensible move. Some policies may ask that you buy this as an add-on, so never assume that it is automatically included within your PII cover.
If you’re rushed off your feet then stopping to get an IT contractor’s insurance quote may not seem like a top priority.
In fact, insurance often seems like something that can either be put off altogether or regarded as an unnecessary luxury.
Yet it is? Getting an IT contractor’s insurance quote may only take a few minutes but it could save your business from destruction and your personal finances from ending up in someone else’s pocket.
Whether you like it or not, your clients typically won’t see you as a friend, confidante or a part of their establishment. If one of their own staff underperforms or runs into trouble, then their own contracts of employment plus the law, will dictate how they react.
By contrast, as an IT contractor, you do not have the protection of a formal contract of employment and the law of the land may offer you comparatively little protection against the consequences of your own mistakes, behaviours or sometimes sheer bad luck.
If an employee makes a mistake then he or she may expect to get a reprimand, further training or in very severe cases, perhaps a written warning. Just about the worst they can anticipate is sacking.
For you, the position is typically significantly different. You may be held legally and financially accountable for a whole range of problems that your client believes originates in your professional engagement. A ‘forgive and forget’ attitude may be unlikely in today’s harsh business world.
If you’re sued and subsequently lose a case for things such as:
• accidental breach of confidentiality;
• loss of your clients’ data or documents;
• product liability;
then the results for you, financially speaking, may be catastrophic.
Getting an IT contractor’s insurance quote that includes PII (Professional Indemnity Insurance) may be the first step on the road towards having insurance that may typically protect you from the worst of the financial risks should any of the above come to pass.
Taking the time to look closely at an IT contractor’s insurance quote may open up your eyes to both your risks and, perhaps more importantly, what you can do to protect yourself against them.
IT consultant’s insurance is a form of cover aimed at protecting freelance professionals operating within the field of IT.
It’s a form of Professional Indemnity Insurance (PII) but with some added protection that may be included.
Some professional indemnity insurance policies may or may not contain financial protection against the consequences of:
- tax and VAT investigations;
- professional indemnity actions;
- employer’s liability and public liability exposures.
TAX and VAT investigations
HMRC (Her Majesty’s Revenue & Customs) may require you to attend a meeting (or other form of informal, formal or legal hearings) in relation to your taxation affairs.
This may be expensive, particularly if you need to appoint an expert to handle your case and discussions with HMRC on your behalf.
In some cases, this component of IT consultant’s insurance may typically help with components of those costs.
Professional indemnity claims
Your clients may, perhaps understandably, hold you to be accountable for the quality and integrity of the services you provide to them in return for your fee.
If something goes wrong and your client subsequently believes you have performed negligently, then they may take legal action against you for damages.
Examples of such claims may include things such as your unintentional infringement of intellectual property rights, product liability or an accidental breach of confidentiality etc.
The level of awards against you in this area may be staggeringly high – and you may also face legal costs even if you win.
Employers’ and public liability insurance
These are typically two different domains of cover.
Depending upon your circumstances, if you have employees the law may demand that you have employers’ liability cover insurance.
Public liability insurance cover is, as the name suggests, to help protect you against the costs you may incur if a member of the public suffers injury or damage as a result of your activities. In the case of some consultant’s insurance this is purchased separately but some insurance providers may include it in their consultant’s cover as standard.
Protecting your interests
You may be proud of your professional activities and the business you’ve built.
Taking steps to protect your financial and emotional investment might make sense and IT consultant’s insurance may help you achieve that.
For anyone working on a freelance basis offering advice or providing services to clients, professional indemnity insurance (PII) may provide financial protection against being sued by your client.
Can be mandatory
For some occupations like accountancy or solicitors for example, professional indemnity insurance (PII) is typically mandatory.
For others, while this may not be the case, PII though optional, may be highly advisable.
In fact, you may find that your clients may insist that you have this type of cover.
Even if they don’t, your proposals/CV may look more impressive to them if they can see that you take your responsibilities seriously by having PI insurance cover in place.
Protection offered by PII
Your client probably paid a significant amount of money for your services as a consultant. They may rightly expect to receive a high standard of work in return and in most cases they hopefully do.
If, for whatever reason, this turns out not to be the case and your client’s business suffers losses that could be attributable somehow to errors or negligence on your part, then they may decide that they may be able to recoup some of those losses by suing you.
Amongst other things, this could be as a result of:
- accidental breach of confidentiality;
- loss of documents or data;
- damage caused by label or slander;
- dishonesty on your part;
- unintentional infringement of intellectual property rights.
So if you do find yourself being sued by your client then your PI insurance may help cover any damages awarded and legal costs.
This obviously assumes that the level of protection you have put in place is commensurate with awards typical for the type or work that you do.
If you have been tempted to economise on premiums and buy a lower level of cover, then you may still find yourself having to find substantial amounts of money to make up any shortfall between the award and your insurance limit.
Another area of insurance cover that may be relevant to you as a consultant is public liability cover. This can typically provide protection against third parties or members of the general public who sustain injury or whose property is damaged as a result of your actions.
This type of cover may be included with some professional indemnity insurance policies.
There is, perhaps, a slight danger that management consultants’ professional indemnity insurance is seen as a luxury and nice-but-not-essential accessory to your professional portfolio.
That logic and train of thought may be fine – right up until you find yourself being sued under any one of several categories including things relating to losses of data or documents, libel and slander, public liability or accidental breach of confidentiality etc.
The problem is that, as a management consultant, you will typically operate in close contact with your client. Through your fees, you will be helping position them for success and taking your rewards accordingly.
While things are going well, everybody may be happy with that situation.
However, if things go wrong, and that can happen very quickly, your clients may expect you to take responsibility for the consequences – and they may demand more than just a sincere apology.
If you don’t have management consultants’ professional indemnity insurance, you may find yourself in some cases facing insurmountable costs that could, potentially, bring your business down.
Keeping cover effective
It’s also worth keeping in mind that your potential liabilities don’t cease the moment your contract with the client does.
Client can, and sometimes do, take action a considerable period of time after a contractual relationship has been formally terminated.
If you have allowed your insurance to lapse, you may find yourself needing to deal personally with any financial implications arising.
A selling aid
Some potential clients may be positively influenced by your ability to show that you have this sort of insurance cover.
Others may, in fact, insist that such cover is in place as a mandatory component of any request for information or a proposal. Being seen to be rushing to put this into place at the last second may not create quite the professional impression you were hoping for – so thinking ahead may be advisable.
Like any insurance, management consultants’ professional indemnity insurance costs money. Yet those costs may typically be seen as being modest in view of the protection and peace of mind provided. Finding out more may be a useful investment of a few minutes of your time.
It’s to be hoped that you’re never in a position where you need to call upon management consultants’ insurance.
However, such situations may arise a little more easily than you may think.
Economic conditions are always tough and in today’s world people may not be inclined to ‘forgive, forget and move on’ when things go wrong.
A previously excellent professional relationship can deteriorate within minutes and move quickly into attribution of blame mode. Once that happens, you may be very close to people reaching for the phone to call their legal advisors – and taking the first steps on the road to needing to defend yourself from a legal action.
The costs of all of that, even if you win, may be very substantial.
That’s why it may be worth giving serious consideration to taking out management consultants’ insurance.
Typically a policy may offer you protection against things such as:
- unintentional infringement of intellectual property rights and entitlements;
- public liability cover (in the case of some policies this may need to be purchased separately);
- libel and slander;
- product liability;
- the loss of documents or data, etc.
The amount of cover provided would typically depend upon the cover levels you have purchased. Before trying to economise in that area, it may be worth noting just how big some awards against you may be if you’re sued and lose.
Without insurance, you may be trying to meet those costs out of your own financial reserves.
Nobody can tell you how likely you may or may not be to encounter these sorts of problems. Equally, nobody can predict what would happen should you find yourself at the wrong end of a legal action.
What is clear is that the potential costs involved are huge.
So, you may have a choice:
- continue to ride your luck and simply hope it never happens to you or;
- take steps to protect yourself and your business through appropriate insurance.
Management consultants’ insurance is often referred to as professional indemnity insurance (PII). Finding out more might be a smart idea.
IT consultants’ insurance is a form of Professional Indemnity Insurance (PII).
It exists to offer financial protection to IT professionals against claims from their clients that they were somehow negligent when carrying out their work and that this negligence cost their client money.
It’s not just producing bug-free programme code that an IT consultant may have to worry about. There are a number of other different roles and activities within the broad term IT contractor including:
- management consultancy;
- business process re-engineering;
- systems design;
- project management;
- web based consultancy and design.
Any of these activities may give rise to claims for negligence based on:
- loss of documents or data;
- breach of client confidentiality;
- product liability;
- unintentional infringement of intellectual property rights.
If your clients claim there are errors in your work that have caused them financial loss or that your work has in some other way been substandard or negligent, then they may decide to sue you.
What happens then may vary, depending on whether or not you have professional indemnity insurance protection behind you.
If you do, then you may expect that typically, and up to set limits, any award will be covered by your insurance as well as your legal costs. It may be worth noting that legal fees may be covered whether you lose or win.
If you have no PII, then you could very well be facing financial ruin, as you would be personally responsible to pay the damages and very probably the legal fees.
PII for IT contractors is not a compulsory form of insurance cover in the way it typically is for medical practitioners or legal professionals. However, given the size of potential awards for damages, particularly if you compare these to cost of an annual premium, it may make good financial sense.
Whether you are a consultant offering advice or a hands-on programmer, IT consultants’ insurance may be able to help you handle the implications of being what you are.
Remember too that once the job is done and your contract terminates, you may still be held liable if things go wrong further down the line.
So if, for example, you wish to cancel your IT consultants’ insurance or perhaps change insurance provider, then you may need to ensure that there is specific contingent cover provision for this situation.
Experience shows that problems resulting from failures in Information Technology may be all too common. As an IT contractor, while you obviously may take great pride in the quality of your work, if you don’t have IT contractors’ insurance then dismissing these issues as someone else’s problem may be a bit short sighted.
IT contractors’ insurance is a form of Professional Indemnity Insurance (PII).
PII exists to protect professional working people in many business areas from being sued for damages by their clients.
Why it’s important
There are possibly some businesses still around which don’t use information systems of some sort. However, these may be few and far between.
Many companies have a substantial financial investment in the IT infrastructure that may not just support their business but actually be an integral part of the business process itself.
Being able to deliver to customers and clients is crucial to the success of any business and a failure to achieve that can be a financial disaster. If the company’s IT doesn’t function correctly then one of the first things that may suffer is that ability to deliver to the customer.
Of course if this scenario comes to pass, then understandably the company directors may be looking round for someone to blame and possibly to recoup some of their losses.
If they think that the responsibility for their problems rests squarely on your shoulders then you may find yourself on the wrong end of a damages claim alleging that your error or negligence was the cause.
Even if their assertion is subsequently proved to be unfounded, you may still be facing the prospect of having to pay for the legal fess you incurred defending yourself.
This is where IT professionals’ insurance cover could be invaluable.
Level of cover
It’s important to get this right.
The amounts that may be awarded against you can, in some cases, be staggeringly high. The small savings on premium costs achieved by selecting a less than appropriate PI insurance policy may in some cases pale into insignificance when viewed against any shortfall between an award and the amount that IT PII cover could pay out.
Unlike PII for some other professions, IT contractors’ insurance is not compulsory in many situations. It may, however, help protect you in what is becoming a more and more litigious business environment.