How a computer contractor professional indemnity cover plan works
When starting out as an IT consultant it may seem unnecessary to get something like indemnity cover in place, particularly if you have a small number of clients which have ended up on your books due to word of mouth and recommendations, but as your business grows, your needs may change and you may find that getting a greater form of protection is necessary. Computer contractor professional indemnity cover can be simple to arrange and inexpensive, and will pay the cost of your legal bills should you ever face an action.
Being sued may not seem particularly likely depending on your circumstances, but where does happen it can sometimes appear without warning and can be lengthy and costly. A solicitor’s letter may arrive relating to something which happened months ago, which has since led to a client losing money due to something they see as an error committed by you. No matter how valid the claim is, it will have to be defended, and this will normally mean hiring legal help.
Indemnity cover would kick in and cover the cost of your legal bills if this happened, and normally applies to a mistake, error, omission, or act of negligence. It normally also protect you should you face a claim that you have breached confidentiality, breached someone’s copyright, or that you have lost or stolen important data belonging to a client. In short, it is designed to pay out for some of the more common legal pitfalls which can affect a business.
Once a policy is active it will cover your legal bills up to a certain limit, and this can be quite considerable. Some larger firms may have protection running into millions of pounds. Not every company will need this, but you will need to decide what protection you need and this can be based on the size of your clients and how your business is run. Note that the limit of your policy will normally include a provision that you will get payouts towards compensation, should this be awarded against you.
There is a risk of being under-insured if you specify a limit which is too low, but of course if you choose a limit which is not appropriate, there’s also the chance you will be paying for a high level of cover which you do not really need.
Computer contractor professional indemnity cover normally also allows you to specify an excess, which can be used to reduce the cost of your premium if necessary. You can also normally enquire about getting public liability insurance included with your deal. Common extras also normally include what is known as overrun cover, allowing you to have protection after you wind down a business or retire, guarding against any periods which would otherwise leave you vulnerable and without protection. Retroactive cover can also guard against things which happened in the past, for which you only receive notification of after you bought the policy.
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