IT consultants’ insurance – the basics of a policy
Anyone in business might want to consider the various types of insurance out there. For example buildings insurance typically protects against something happening to your business premises. Another type of insurance that you may wish to consider if you are in the information technology business is IT consultants insurance.
A policy typically provides protection against several events.
What is IT consultants insurance?
As an IT consultant you are typically dealing with individuals and companies who rely on you and your advice. If you were to give someone advice that causes negative implications to a business, you may potentially find yourself facing a claim for compensation and a court case. This typically comes with often substantial costs, but with professional indemnity insurance, you may get assistance - up to a set limit - to help meet your legal costs.
Losing clients data or documentation
As an IT consultant you are probably around a great deal of data belonging to various clients. If something happened to this data or paperwork, you may be taken to court. Again IT Consultants insurance is there to help you out financially.
Breach of confidentiality
You may accidentally cause a breach of confidentiality. The insurance policy may typically cover this event, which again might end up saving you a great deal of money as well as damage to your reputation.
Public liability insurance
If you have visitors at your place of business you may want to consider if public liability insurance is already included in your insurance. This form of protection typically helps to protect you against the financial implications of being sued if someone suffers injury or death whilst on your property. Some insurance providers may include it as a standard part of your cover, or it can often be an optional extra.
Choosing your policy
Of course insurance companies recognise that there are many different sizes of businesses - your company may consist of just two or three or it might be a hundred or more. With this in mind you may wish to check out that any IT consultants insurance policy you are considering is adequate for your company’s needs. Reading the terms and conditions thoroughly and speaking to your broker if you have any queries may be key to ensuring that you get the most suitable insurance for your business.
The typical benefits to IT contractors insurance
Anyone offering a professional service by way of a business may benefit from certain types of insurance. IT contractors insurance is a type of insurance that typically provides protection offering several benefits and may be worthwhile considering if you are in the information technology business.
The benefits included in IT contractors insurance may vary depending on who you take the policy out with and the level of insurance you require. While this type of insurance is not typically compulsory, it may pay to have it behind you if the worst case scenario were to occur and you found yourself in a tight spot if a claim is made against you by a client for such things as loss or damage (see examples below). Without insurance you may have to find large sums of money out of your own pocket as owner of the company.
You may find that the policy typically protects against events such as these listed below. However, not all IT contractor insurance policies will offer all of these benefits and features. Some may come as standard or may be an optional add on or may not be available at all, so it may make sense to consult a specialist professional indemnity insurance broker:
- a loss of customer’s data or documents – as you are offering a service as an IT contractor insurance covering this loss may be a lifeline as typically you may be involved with data and/or documents;
- public liability protection – the insurance provider may include this in your policy or you may be required to add this on as extra. This part of the insurance generally provides protection in the event of a member of the public suffering an accident or loss on your property;
- breach of confidentiality that is accidental;
- slander and libel claims that may be made against you.
When taking out insurance always check the small print as there are typically terms and conditions and again these may differ based on your insurance provider.
In summary, while insurance may be perceived as another added cost, without it your company and business may be put at risk. If the worst scenario raised its ugly head you might be forced out of business if a claim for substantial damages is made against you and have no insurance behind you.
Outlining IT contractors insurance
As an IT contractor, it may be advisable to consider the benefits of IT contractors insurance cover.
Why?
No matter how good you are at your job, if you think back over your career in IT, you may well be able to remember occasions when projects you were working on went wrong. Perhaps serious consequences arose for your employer.
If you were a permanent employee, you may have been protected from all of the financial consequences.
That may not be the case if you’re working as an external contractor.
Professional indemnity cover
IT contractors insurance is a form of professional indemnity insurance (PII).
It is not usually a mandatory requirement for IT contractors in the same way as it typically is for solicitors, architects, insurance brokers and the like.
It provides financial protection against claims by your client that your mistake, negligence or bad professional advice, have resulted in loss or damage to them or to their business.
They may know you didn’t mean any harm
In today’s harsh economic reality though, the chances that an unintentional error of judgment on your part will be overlooked with a shrug of the shoulders may be very slight indeed. Budgets are typically tight and there may be no slack available to rectify the position.
It may be all too tempting for a client to decide to sue you to try and get some redress for your actions.
Wide range of cover
PII can provide cover for a lot more than just faulty system design, missing deadlines or bad programming. It can also protect you financially if you are sued as a result of action such as:
- you losing your clients data or documents;
- defamation, libel or slander;
- a dishonest act on you part;
- you accidentally breaching clients confidentiality;
- infringement of intellectual property rights.
You may find that your legal fees, which may need to be paid even if no case is found against you, will typically be included as standard in the PPI policies of many providers.
All other things being equal
Competition for IT contract positions can be fierce.
Even though it is optional for your line of work, having IT contractors insurance in place may highlight your professionalism and maturity to potential employers and could help swing a hiring decision your way and help you secure that precious contract.
IT contractors insurance – reducing your risks
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.
Thinking about IT contractors insurance
IT contractors insurance typically isn’t mandatory in many contracting situations (though some clients may demand it) – but it may be a very good idea.
Professional risks
As an IT professional, you are probably rightly proud of your skills, knowledge and expertise.
You deploy these in support of your client’s objectives and receive a fee in return.
Unfortunately, things don’t always run quite as smoothly as that.
Things can and sometimes do go wrong and your relationship with your client or associates can sour very quickly.
Whatever may have been the case in the past, today people are inclined to turn quickly towards claims and legal redress when a problem arises. If you don’t have insurance to help protect you from the financial implications of such situations, then you may find yourself digging deep into your personal or company financial reserves.
IT contractors insurance (professional indemnity insurance)
Professional indemnity insurance (often abbreviated to PII or PI insurance) typically incorporates the provision of technology contractors cover. This may help offer some financial protection against certain risks.
The cover offer of course varies depending upon the policy but typically includes things such as:
- public liability;
- accidental breaches of confidentiality;
- loss of a client’s data or documents;
- slander and libel;
- defamation of character;
- your unintentional infringement of intellectual property rights;
- etc.
It is worth noting that the above forms of professional indemnity insurance typically differentiate between your accidental transgression and an intentionally criminal act – the latter will typically not be covered.
Probabilities
Some IT contractors have progressed their careers for many years and never encountered any problems of the type outlined above. Let’s hope that you have the same good fortune!
The problem is, getting hit by any of these types of problems, even once, could easily lead to your financial ruin. So, do you want to gamble on your good luck holding forever?
The typical costs of PII may be seen as relatively modest in terms of the risks that you are perhaps taking by doing without it.
Finding out more about IT contractors insurance sooner rather than after it’s too late, might be a good investment of a little of your time.
IT contractors insurance – what is it?
If you are an IT contractor, IT trainer or IT consultant, then it may make sense to protect your reputation and your business with professional indemnity insurance. You can get trade-specific professional indemnity insurance - IT contractors insurance - which will help protect you in the event that problems arise due to work carried out by you / or due to advice you have given to a client.
IT contractors insurance can also help you in the event of something else going wrong between you and client. However, do note that policy terms and conditions can vary among professional indemnity insurance providers, so you need to check your cover to make sure you have the protection your business needs. What is standard within one policy may not be with another.
Following is a snapshot of just some of the cover a typical insurance for IT contractors policy may provide:
- loss documents or data;
- accidental breach of confidentiality;
- libel and slander;
- the supply of deliverables;
- dishonesty;
- unintentional breach of contract.
Getting covered
Professional liability cover can be crucial for your business. Certainly, should the worst happen and a claim is made against your company for one of the sort of situations listed above, then you may find yourself having to dig deep in to your pockets in order to pay for any loss or damages awarded to the claimant – plus your legal defence costs too.
This could run in to thousands and thousands of pounds – money you’d have to find yourself. Substantial costs may wipe out your business, depending on the sum awarded and how profitable your enterprise is.
So, investing in protecting yourself and your business against the ramification of such claims can make sense. In fact, you may find that some clients may only work with you if you have IT contractors professional indemnity insurance in force, as this protects them too.
Surprisingly, for the cover that a professional indemnity insurance policy could offer you, premiums may often be realistic.
Getting covered with an IT contractors insurance policy can give your business financial protection. And by using the services of a specialist provider, you will often be able to access a suitable deal at a suitable price.
IT consultants insurance – professional indemnity insurance for your business
IT consultants insurance is a trade-specific professional indemnity insurance policy. Professional indemnity insurance (PI insurance) is something that many businesses will have, whether through choice or because it is mandatory to their profession (such as if you are an accountant). This insurance can give you peace of mind that should something go wrong and you are sued by a client, your business finances (and hopefully your reputation) will remain intact.
IT consultants insurance can generally provide cover against unsavoury situations that may occur such as accidental breach of confidentiality; defamation; libel; slander; dishonesty of an employee; loss of data or documents; unintentional infringement of intellectual property rights; wrong advice etc.
Public liability insurance may also form part of a PI insurance package or can often be purchased as an add-on to enhance your company’s protection.
Why do I need it?
Something as everyday as you providing consulting work on a computer system that then all goes horribly wrong may see your client sue you for damages. Not only will a court case be stressful, but your reputation and your business finances could be seriously compromised if your client is awarded damages.
This is where IT consultants insurance may be able to help, typically by paying towards the costs of defending you against any allegations made against your company, as well as any damages that are awarded.
In a nutshell, the policy can help defend a claim against you as well as cover you for any costs you become liable for. Certainly, having this form of risk management in place in the shape of a professional indemnity insurance policy may help your business survive if things get rocky and a client sues you or your business.
As mentioned in the opening paragraph, in some professions, professional indemnity insurance is mandatory. You may also find that some clients will only work with you if you can show that you have a PI insurance policy in place. This gives them protection that, should they need to sue you, they know they stand a chance of getting any costs awarded, if their claim is successful!
It can be a dog-eat-dog world out there and society seems to be more litigious than ever. Protecting yourself with IT consultants insurance may be something worth considering.
IT consultants insurance – business protection
IT consultants insurance can typically provide your business with invaluable financial protection against claims from third parties who believe that you have done something that it is detrimental to them or their business.
A typical IT consultants insurance policy provides cover against claims for such things as third party injury; negligence; loss of data or documents etc. Sometimes known as professional indemnity insurance (PII) (with public liability cover often included or added on), this business insurance helps provides protection in respect of any legal liability claim against your livelihood by assisting financially with court cases, legal defence and awards for damages – subject to your claim being satisfactorily accepted of course.
When choosing IT consultants insurance, there are a number of considerations that you need to take in to account:
- do note that as with most insurance policies, in the event of a claim, generally you will be liable to pay an excess on your policy. Ensure you know what this is;
- ensure that your policy covers all time frames. Often, there may be a delay between an event happening and the subsequent claim against you / your business. So, if you are in the middle of changing insurers or getting a new IT consultants insurance policy, ask your new provider if they will accept new claims for prior incidents. This is often known as retroactive cover;
- there are many PII policies offering different levels of cover, so ensure that you have an ample amount of protection. Do be realistic as to the amount of IT consultants insurance needed. Being under insured is almost as bad as not having insurance at all;
- policy features and benefits of an insurance policy will invariably differ depending on the insurance for IT consultant providers. Ensure that you check them to confirm the pertinent points of the IT consultants cover.
Prevention
Of course, it’s not just about getting the most suitable insurance for IT consultants cover - there may be ways that you can help minimise the risk of someone making a claim against you. Common sense things, such as documenting expectations beforehand, (eg responsibilities, deadlines etc) may mean you can manage the workload and the relationship before any problems arise.
IT consultants insurance should be considered by anyone who runs a business as the benefits offered in the face of a claim may prove invaluable.
IT contractors insurance explained
No matter how good you are at your job and how well you run your company, sometimes things go wrong. Then, you may be faced with a claim against you – with the knock on effect that your business may face financial ruin. That is why IT contractors insurance could be worth considering.
If you run a business, whether you are the sole employee-owner or you have staff, it can still make sense to ensure that you protect yourself against the unexpected. These sorts of unexpected things could include claims against you or an employee for perceived negligence; the loss of sensitive documents or data; plus other events that can crop up as result of you going about your business.
Certainly, in today’s litigious society, having some form of professional indemnity insurance (PI insurance or PII) in place could be a sensible idea.
Things can go wrong
You may think “it’ll never happen to me, my customers are always happy with what I do for them”. However, claims can be made against your business – such as where your customer suffers some form of loss because of actions – or lack of actions – carried out by you or an employee.
And if a claim is made against you, unless you have deep pockets to cover the cost of legal defence as well as potentially any compensation you may be ordered to pay, then your business will have to pay up.
You could then potentially face paying out a five or even six figure sum, as well as having your reputation tarnished.
The good news is that IT contractors insurance may typically help pay for the cost of defending you against any claims made against your business, as well as damages.
And insurance for IT contractors can not only help protect you financially, but can also help keep the reputation of your business intact.
What sort of cover can it provide?
The policy features and benefits of IT contractors cover will vary depending on the provider, but a typical policy may provide you with protection against claims for such things as:
- accidental breach of confidentiality;
- loss of data or documents;
- product liability;
- libel & slander;
- defamation;
- dishonestly;
- unintentional infringement of intellectual property rights
Getting a suitable deal
If you are considering IT contractors insurance, then you need to make sure that you purchase it from the right place. Specialist providers of professional indemnity (professional liability) insurance will typically have unlimited expertise in the sector. This often means that they can give you access to suitable cover, helping you protect your business properly.
Protecting yourself and your livelihood does not have to be a time consuming exercise. By using a specialist provider of IT contractors insurance, they can help you find the most suitable PII solution for your business.
Why buy IT consultants insurance?
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!