Explaining the basics of computer contractor PII
PII might sound like just another phrase in a mountain of insurance-related jargon. But it is a potentially useful product and can be a lifeline for some companies in the right circumstances. Computer contractors may find it useful as they are often hired by clients to take on a large amount of IT-related responsibility, which can occasionally lead to mistakes and disputes. Computer contractor PII will pay a policy holder’s legal bills, meaning they can defend a case more comfortably while continuing to run their business.
PII stands for professional indemnity insurance, and is a type of cover designed to protect a business from some of the legal pitfalls which can befall firms which provide advice on a professional basis. Usually it helps to defend claims which result from an allegation that a policyholder has committed a mistake, an omission, or act of negligence while carrying out their work. Normally it also protects against things like unintentional defamation, breach of confidence or copyright, and the dishonesty of a contractual company’s employees.
Computer contractor PII works by paying for legal bills run up defending such allegations. In exchange for a regular premium, a policyholder can expect protection up to a certain amount of expense, i.e. £500,000 worth of solictior’s fees. This enables someone to afford a legal defence while not having to unduly worry about how the case will affect them financially. Of course, a policy cannot make any claim go away, but it can help take away the stress of what will happen to a firm if it is landed with a massive law-related bill.
Say a claimant is successful in their case, it will even pay compensation, again up to the policy limit. This type of policy is normally quite flexible and insurers can arrange for special periods of cover while a contractor winds down their business or retires. This is known as run off cover, and will protect someone against historical claims after they have finished trading.
It is important to select the right level of cover which applies to your business. So for example, a contractor might select protection for £400,000 worth of legal bills. However, if they have to fight a case which costs £480,000, they will be left to pick up the £80,000 difference. This is known as being ‘under insured’ and in some cases can dramatically impact on a business. If the firm is only able to survive so much financial pressure, it might go under anyway, even if it has a policy, because the wrong level of cover has been selected. Computer contractor PII is therefore quite straightforward, and in some circumstances can be the difference between a business continuing virtually as normal, and having to fold under the weight of paying for a case.
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