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.