Computer Contractor PII

October 22, 2008 · Filed Under Computer Contractor PII 

Consultants often take great pride in their work and many assume they are sufficiently trained and prepared to ensure that a mistake is unlikely to ever occur. Computer contractors and other types of hired expert are entitled to have faith in their work, but errors can still happen which may lead to a client suffering a financial loss. Worse still, there is always the chance a client will make a claim that, although invalid, must still be defended in court, resulting in significant wasted time and money. A  computer contractor PII policy aims to protect a firm from such risks.

PII, or professional indemnity insurance, to give it its full title, will pay for the cost of legal defence bills which are incurred should a contractor make a mistake or act negligently and face a claim from a client. Mounting a legal defence is an expensive proposition which can cost thousands of pounds or more – a computer contractor PII policy will cover the cost and allow the policyholder to better concentrate on the running of the business.

An error can involve pretty much any form of business mistake which leads to financial damage for a client. A simple mistake installing a firewall or virus prevention system, which leads to data damage or theft and a claim, would be covered by a typical PII policy, for example. PII will also include cover for cases which involve an accusation that a consultant has committed libel, slander or has defamed a client unintentionally. Legal fees will also be covered should a consultant face an allegation that they have breached confidentiality or committed unintentional infringement of intellectual property rights. If a computer contractor is entrusted with a client’s data or documents which are accidentally lost or destroyed, they will also be covered if the client then sues for damages because of loss they have subsequently suffered.

A computer contractor may set up and start trading but not get a PII policy in place until some months after they have begun taking on work. Most types of cover will include a ‘retroactive’ feature, which even provides cover for a case which relates to an event which took place before the cover was bought. The slow nature of legal claims means there is also a chance one will arrive even after a contractor retires or ceases trading. ‘Over run’ or ‘run off’ cover can be arranged to deal with such an occurrence.

Computer contractor PII might not be the first thing someone thinks about when setting up as a consultant but it is arguably just as important as marketing, equipment and bookkeeping. In the right circumstances, it could ensure the financial future of a contractor’s business and allow them to both defend their reputation and concentrate on providing a good service to other clients.

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