IT consultant’s insurance is a form of cover aimed at protecting freelance professionals operating within the field of IT.
It’s a form of Professional Indemnity Insurance (PII) but with some added protection that may be included.
Some professional indemnity insurance policies may or may not contain financial protection against the consequences of:
- tax and VAT investigations;
- professional indemnity actions;
- employer’s liability and public liability exposures.
TAX and VAT investigations
HMRC (Her Majesty’s Revenue & Customs) may require you to attend a meeting (or other form of informal, formal or legal hearings) in relation to your taxation affairs.
This may be expensive, particularly if you need to appoint an expert to handle your case and discussions with HMRC on your behalf.
In some cases, this component of IT consultant’s insurance may typically help with components of those costs.
Professional indemnity claims
Your clients may, perhaps understandably, hold you to be accountable for the quality and integrity of the services you provide to them in return for your fee.
If something goes wrong and your client subsequently believes you have performed negligently, then they may take legal action against you for damages.
Examples of such claims may include things such as your unintentional infringement of intellectual property rights, product liability or an accidental breach of confidentiality etc.
The level of awards against you in this area may be staggeringly high – and you may also face legal costs even if you win.
Employers’ and public liability insurance
These are typically two different domains of cover.
Depending upon your circumstances, if you have employees the law may demand that you have employers’ liability cover insurance.
Public liability insurance cover is, as the name suggests, to help protect you against the costs you may incur if a member of the public suffers injury or damage as a result of your activities. In the case of some consultant’s insurance this is purchased separately but some insurance providers may include it in their consultant’s cover as standard.
Protecting your interests
You may be proud of your professional activities and the business you’ve built.
Taking steps to protect your financial and emotional investment might make sense and IT consultant’s insurance may help you achieve that.
If you run a business, then it make may sense to protect yourself against just about any eventuality. Working within an IT environment means that you could face claims against you or an employee for things such as the loss of sensitive documents or data, negligence, etc. That is why considering IT consultants insurance may be a good idea.
Of course, these sorts of risks do not just face those who work in the information technology workspace – every business owner may wish to give serious consideration to the benefits of professional indemnity insurance if they wish to protect their company against unexpected financial loss.
What are its benefits
You can get different types of professional indemnity insurance, all of which can help protect you and your livelihood in the face of claims made against you. So, for someone in the IT business, insurance for IT consultants cover may be suitable. This professional indemnity insurance policy may be tailored to cover the specific risks faced by someone working in your profession.
Why you may wish to consider it
A claim can be made against your business where your customer suffers some form of loss because of actions – or lack of actions – on your part. Errors and omissions can and do happen even to the best of managed businesses, and yours is no different. In the event of a successful claim, an IT consultants insurance will typically pay for the cost of defending you against any allegations made against your company, as well as damages.
Even the savviest of business people can be challenged with a claim against them, their company or any employee which could see them face potentially large legal costs. However, having suitable insurance may help by providing financial and legal assistance.
If you are considering this insurance, then you need to ensure that you buy it from the right place. Using a specialist, independent provider of IT consultants insurance may help you access a suitable deal.
To sum it up, a profession-specific professional indemnity insurance policy may protect your business against the unexpected, providing financial recompense in the event of a claim against it. Financial collapse caused by a claim against your company is a worry that all business owners face. But you may help protect yourself against this with IT consultants insurance.
IT consultants insurance may also known as professional indemnity insurance (PI insurance). This is a form of protection that with most professions you do not have to take out by law, but it may be wise to do so (and some professions will require that you have it in order to practise).
A policy typically gives you insurance against a number of events that may lead to your clients taking you to court. Court costs soon add up, so the insurance is potentially a type of safety net against financial ruin.
Sticking by the rules
Even if you stick to all the rules something may happen that you have no control over. You may lose your client’s data and even though it was an accident, your client may wish to take you to court, especially if this loss of data had some serious ramifications to their business.
The same may happen if you are accused of slander or defamation of character. IT consultants insurance may generally cover accidental situations such as these.
Things to remember when considering insurance
There are some things to remember when you are considering taking out IT consultants insurance. The first of these is that the insurance may not help you if you do something intentionally and you are found guilty in court. In this case you will typically be liable to pay the costs yourself.
Also bear in mind that all insurance policies typically come with terms and conditions, along with exclusions. The exclusions are usually what you cannot claim on your insurance policy for. The limitations generally state how much you may be able to claim, in the event of making a successful claim for one of the events covered in the insurance policy.
If you fail to take out IT consultants insurance and the worst were to happen could you afford to bear the potentially large costs that may be involved? You may even end up losing a great deal more than your credibility; you might lose your business to pay for your mistake.
You may find yourself being sued. Without IT consultants insurance, you may end up needing to pay possibly crippling amounts of money to settle damages and legal fees.
How could that happen?
As an IT consultant, you may be responsible for giving advice and guidance on some significant spending decisions.
While the budget holders may all sign off on your recommendations, if there are problems later on, you may find that you’re held accountable.
IT consultants insurance is a type of professional indemnity insurance (PII).
This provides financial assistance in the event that the client you are working for suffers damage or financial loss which can be attributed to something that you may have done, or omitted to do, in the course of providing them with your services.
As an IT consultant, negligence on your part may be more likely to cause financial rather than physical damage.
Some typical areas where PII for IT consultants may typically help provide you with protection include:
- accidental breach of confidentiality;
- loss of documents or data;
- infringement of intellectual property rights;
- defamation of character;
- allegations of libel or slander.
PII will typically also cover your legal fees and expenses, whether or not the case against you is upheld.
Indemnity insurance for IT consultants is not compulsory in the way it typically is for some other professionals like solicitors or financial advisors.
However, aside from the very real protection that PII provides, it may also demonstrate your responsibility and professionalism to potential clients.
In an environment where competition for work is fierce, having a few extra points in your favour may do no harm.
Continuity of cover
An interesting facet that may be worth consideration is that with many providers of PII, if you stop paying premiums your cover will stop. Nothing unusual in that, you may think.
The trouble is, the nature of your job is such that it may be that problems do not arise straight away.
So if you finish one assignment, decide to take some time off and cancel your IT consultants insurance because you won’t actually be working, you may have to make special arrangements (sometimes known as run-off cover) to ensure that you would still be covered for historical problems.
For IT consultants, mistakes may prove to be very expensive. IT consultants insurance typically exists to help protect you against such costs if you’re unlucky enough to incur them.
Why do IT consultants need insurance?
If you accidentally create a problem for a client or even if they just believe you have created a problem for them, then you may hope that a rational discussion will be all that’s required to resolve the issue.
If that works then fine – but what if it doesn’t?
Business today typically can’t afford mistakes. Errors cost money and like it or not, we live in a business culture where increasingly the philosophy is that someone must pay.
If your services result in serious damage to your client, then they may take you to court seeking financial restitution – and that’s unlikely to be for trivial sums.
If you don’t have IT consultants insurance then typically you’ll need to find these sums yourself.
If this sounds implausible:
- in 2008 British Gas demanded compensation from consultancy Accenture of around £182million for a flawed IT system.*
I’m not a big company!
Perhaps not, but it only takes one mistake by one person to sometimes cause potentially very serious and expensive consequences.
IT consultants insurance is part of what’s commonly termed professional indemnity insurance or PII for short. It can offer protection against various professional risks that could result in legal action against you.
The exact nature of the cover provided varies depending upon the provider of your insurance and the product you select. Typically you may find protection against things such as:
- accidentally losing key information of your clients;
- accidental contravention of confidentiality and non-disclosure agreements;
- accusations of slander or libel;
- infringing (unintentionally) someone’s intellectual property rights.
It’s perhaps worth contemplating that a court may not take much notice of the size of your company when making awards – they may be much more focused on the damage sustained by your client.
That’s why the awards may be large and certainly big enough to cause you serious financial pain.
Even if you do not lose such a case, you can’t guarantee being awarded costs and you may have run up significant legal bills in making a case for your own defence.
It won’t happen to me!
It’s certainly to be hoped that you do avoid being sued but is that hope something you’re willing to gamble your professional and possibly personal financial future on?
Of course, having IT consultants insurance can’t stop one of your clients suing you. It may mean though that you can rest a little more easily knowing that if the worst happens, you have financial support to fall back upon.
*Source: Contractor UK – http://www.contractoruk.com/news/003785.html
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;
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.
Although you may enjoy your job and chosen career immensely, you may potentially be at risk of serious financial loss if you do not have IT consultants insurance. Why?
By virtue of your job, you provide professional services in return for a fee. If one of your clients suffers material loss or damage as a result of your error or poor advice, they may well turn to you for real hard-cash financial compensation. The sums awarded by courts may also be very substantial indeed.
Perhaps this sounds a little unlikely? Consider some following scenarios:
- you have recommended the procurement of a major system or hardware infrastructure that subsequently proves not to be fit for purpose;
- you have accidentally sent a confidential file of your client’s information to the wrong addressee on your email system;
- you have passed on for comment to others some of your client’s information only to subsequently discover that is regarded as commercially sensitive.
The list could easily be significantly extended.
The key point is that as a professional business person you could be called to account legally for a wide variety of things including slander and libel, professional negligence and incompetence, breach of client confidentiality / non-disclosure agreements or defamation of character.
In all these situations, the ‘accidental’ nature of the infringement or what you may have actually intended to do or may be, at best, of only secondary interest to a court. What will count is the effect on your client or the plaintiff and that is where damage awards may leave you in serious financial difficulties unless you have IT consultants insurance. This insurance may help in situations like these.
This form of cover is part of our professional indemnity insurance (PII) product. We also offer public liability insurance to protect you against the financial effects of claims from members of the public who have suffered injury or loss as a result of your activities.
You can find out more about IT consultants insurance entirely free of obligation by reading further information on our web site. It may be a useful investment of your time and a first step towards reducing your financial exposure profile!
IT consultants may carry with them a significant amount of technological equipment, including laptops, handheld devices, and other gear. Hopefully they will have insured these for accidental damage, but there are other cover considerations to consider too. For example, an IT consultants insurance plan may include an element of professional indemnity protection.
This is a kind of cover which may be considered by any business which provides professional advice. For example, in the past it has been associated with more traditional trades such as accountancy and the medical profession. This is because sometimes these experts need a level of professional indemnity in order to qualify for membership of certain associations.
But professional indemnity has recently become more popular with other kinds of business. This is because of a heightened level of legal awareness in business and in society in general, which may increase the chances of being sued if something goes wrong.
Professional indemnity typically protects you or your business in the event you are taken to court following a mistake.
Typically you are entitled to pay outs in the event you face action for an act of negligence, error, or mistake in your general business.
The payouts are designed to cover defence fees run up by solicitors, plus compensation costs if they are awarded in favour of the applicant.
This is significant because the cost of hiring a legal team to defend a legal case may be astronomical. As such the payout limits on these types of IT consultants insurance plans may be hundreds of thousands of pounds or more. You may need to decide the level which is right for your business. For example, a very large company with international clients and a turnover of millions of pounds may want a level of protection which is higher than a lone freelance with a limited client list.
One of the benefits of this type of cover is that it does not normally require that the claim against you is invalid for the payouts to be made. Even if you have made a genuine mistake or acted negligently, typically payouts are still made.
One of the common conditions on a policy like this is that mistakes or errors that you make are not intentional, i.e. are committed without malice and are not deliberate.
Cover like this may also be altered to include protection for when you are in between insurers or winding down a business, often referred to as ‘runoff cover’.
You may even get protection against claims which arrive in the future but which date back to something which happened in the past, possibly before you even took out the indemnity insurance.
IT consultants insurance typically involves a regular premium – often related to the maximum level of payout on the policy and possibly also connected to the qualifications and experience of your or any of your employees if this applies.
Whether your game is software design, network development, or Internet Marketing, you may find that IT consultants insurance provides a valuable safety net. This is because it protects against some of the legal threats which are associated with common business practices.
For being sued is now a very real risk, not just for doctors and other professionals, but for anybody who offers their advice on a professional basis.
Clients may take legal action if they feel that you have done a poor job or have cost them money. They may seek compensation through the courts and lodge cases which can drag on for many months and which typically need legal help to defend.
IT consultants insurance with a professional indemnity element may help to pay your legal costs up to a set ceiling.
To give an example, you may draw up a plan to upgrade the company network of a client. But then later if the client believes it contained erroneous advice, IE mistakes, they may seek legal action to recover any money which they spent putting it right.
One of the major benefits of IT consultants insurance is that it does not matter whether or not the claim against you is true or not, typically a policy may pay out regardless. However, the alleged mistake must take place within the guidelines of policy. Most may payout in the event you are accused of a mistake, error, or negligent act, or general slip up in the conduct of your business.
Beyond this a policy also typically pays out if you or an employee of yours is accused of dishonesty, and is perhaps said to have stolen from a client. Beyond this it may also payout in the event you are accused of unintentional defamation, breach of copyright or confidence, or even slander.
This kind of insurance in most cases pays out regardless of what stage your case reaches. Provided you are within the payout limit, you get cash for representation whether you are in initial proceedings or have ended up at the High Court.
If damages are awarded against you, i.e. compensation, a policy may pay out towards this as well, which again may be covered in full if you are still within the policy limit.
In such circumstances you may save hundreds of thousands of pounds or more which you may otherwise have to dig out of the company coffers, or face bankruptcy in some circumstances.
The policy limit is important because it is often linked to the premium. Too much cover and you may end up over insured, paying for a level of protection which you don’t really need. Too little, and you may also end up under insured, picking up any additional cost past the policy limit if you face a lengthy case.
This is why it is important to consider the maximum payout on a policy. You may want to judge it by taking professional advice and looking carefully at the clients you deal with and your turnover before settling on an IT consultants insurance plan.
Companies can turn to outside consultants for that extra bit of knowledge that in-house staff simply don’t have or simply because it is the easiest and most cost effective way of getting a technical job done. IT consultants can therefore be in high demand, particularly as many companies still do not have their own IT departments or do not have staff which specialise in certain areas such as internet marketing or advanced archived technology. However, if you are in this sector it is always worth considering an IT consultants insurance policy, which can provide invaluable support in the event that something goes wrong.
IT consultants insurance will normally include a level of professional indemnity insurance. This is a type of professional cover taken out by almost any firm which offers its advice on a consultancy basis. In the past it was mainly associated with architects, graphic designers, and accountants – but a growing business awareness of the law means other professionals have turned to it for support.
In short it will typically pay somebody’s legal bills in the event they face a formal challenge, i.e. they are sued. This can happen for all sorts of reasons from a simple mistake on a job to an allegation that a consultant has somehow defamed somebody or breached copyright. The cost of a legal case can soar quickly and depending on the details can run into the hundreds of thousands of pounds or more. Then if the case is lost there may be a compensation order on top of the solicitors bills.
Indemnity cover as part of an IT consultants insurance plan will typically pick up the cost for someone’s legal defence and will even pay the cost of any compensation which is awarded against the policyholder.
This will be subject to certain limits, as no insurance company will pay out towards legal bills and compensation indefinitely. However, the firm can select a level which they believe is appropriate to their business. Larger companies with hundreds of clients may want protection which runs into millions of pounds, while a much smaller firm may want a level of cover which is much smaller and will therefore typically include a smaller premium.
An excess can also be arranged on this type of insurance, with the policyholder picking up an initial bill for legal fees before the insurance cover kicks in properly. This can also bring down the cost of the premium.
As far as the protection itself is concerned an IT consultants insurance policyholder is normally covered in the event they are formally accused of making a mistake, omission, or even committing an act of negligence in their day to day business. Allegations of breach of confidence or copyright are also normally covered, as are claims that an IT consultant has lost important data or documents belonging to a client.