IT consultants insurance and peace of mind

April 12, 2010 · Filed Under IT Consultants Insurance 

The health of many businesses these days may be inexorably linked, in one way or another, to their IT infrastructure. This may represent a huge responsibility for those whose job it is to develop or change this infrastructure, which is why IT consultants insurance may be a sensible step for you.

IT consultants insurance is a form of professional indemnity insurance or PII.

This type of insurance offers protection from the consequences of being sued for damages by your client if they have suffered financial loss as a result of your professional services.

There are a number of potential areas where your professional actions could have adverse financial repercussions.

Typically as an IT consultant, you may be giving advice on what could result in major financial expense on new IT infrastructure or recommending and designing changes to existing systems.

There are the obvious situations, where your client’s business may not be able to function properly as a direct result of something you did (or recommended to have done) to their IT systems. This may result in significant loss of income for your client, not to mention the additional costs for rectifying the situation and then paying again to have the work done properly.

Other possible problems could arise from:

  • losing data or documents belonging to your clients;
  • accidentally breaching confidentiality;
  • incidents of libel or slander;
  • being late in delivering agreed milestones;
  • accidental infringement of intellectual property rights;
  • etc.

In any of the above circumstances, some of your clients may be happy with a sincere apology from you but others may not – they may seek some form of financial redress. This may take the form of suing you for damages.

In this situation, if you didn’t have any IT contractors insurance you may be facing the prospect of needing to find significant amounts of money for two different types of costs:

  • damages awarded against you if your client’s claim is successful;
  • the money you personally would have to find to pay the legal costs and fees arising from having to defend yourself against the claim – even if you were ultimately successful.

If you have IT consultants insurance on the other hand, provided you have adequate levels of cover, your insurance may cover some of these costs for you subject to the policy details.

IT consultants insurance may not be a mandatory requirement for you to carry out your role of providing professional services but it may help to keep your business afloat if you end up at the wrong end of a claim for damages.


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