IT contractors insurance – reducing your risks

May 6, 2010 · Filed Under IT contractors insurance 

Yes, IT contractors insurance costs money! There’s a fair chance then that you’re wondering if it’s worth the cost.

Of course, ultimately only you can make that decision. While doing so though, it may be advisable to think just as carefully about the risks of doing without it as you will about the cost of the premium.

Modern professional life – not a laughing matter

One of the most commonly heard words today in business and the media is accountability.

If you’re charging a fee for your professional services, your client and those around you will expect exemplary service. If they don’t get it or something just simply goes wrong, then they may hold you accountable and look to you for professional compensation.

Those scenarios may be seriously expensive, perhaps ruinously so. That’s why IT contractors insurance exists.

The nature of professional risk

So what exactly are your risks?

That will clearly depend upon the specific nature of your business and activities but you may find yourself on the receiving end of claims for compensation due to things such as:

  • professional negligence resulting in loss of a client’s data or documents;
  • accidental infringement of intellectual property rights;
  • implementation of solutions that are not fit for purpose and through which your client suffers material loss;
  • late delivery on target dates;
  • libel;
  • slander;
  • and so on.

IT contracting and insurance

IT contractors insurance is part of a generic insurance product range called PII (professional indemnity insurance).

It means that in the event you’re facing legal action for the above reasons, plus others, then you have the security of knowing that insurance is in place to help you survive. It may be worth also keeping in mind that even if the claim against you fails, you may still incur significant legal and other expenses in defending yourself.

In fact, today some employers are insisting on seeing that it exists before they’ll award an IT contract.

PII and honesty

Typically, PII exists to protect you against honest mistakes or circumstances beyond your control.

It typically won’t offer you financial protection if you’re found to be guilty of intentional malpractice or criminal intent.

The facts of life

If you are unfortunate enough to suffer a successful professional claim against you, the sums involved may in the worst case destroy your business and seriously affect your professional life.

Seen against this backdrop, the cost of IT contractors insurance may not seem so expensive at all.

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