If you’re rushed off your feet then stopping to get an IT contractor’s insurance quote may not seem like a top priority.
In fact, insurance often seems like something that can either be put off altogether or regarded as an unnecessary luxury.
Yet it is? Getting an IT contractor’s insurance quote may only take a few minutes but it could save your business from destruction and your personal finances from ending up in someone else’s pocket.
Whether you like it or not, your clients typically won’t see you as a friend, confidante or a part of their establishment. If one of their own staff underperforms or runs into trouble, then their own contracts of employment plus the law, will dictate how they react.
By contrast, as an IT contractor, you do not have the protection of a formal contract of employment and the law of the land may offer you comparatively little protection against the consequences of your own mistakes, behaviours or sometimes sheer bad luck.
If an employee makes a mistake then he or she may expect to get a reprimand, further training or in very severe cases, perhaps a written warning. Just about the worst they can anticipate is sacking.
For you, the position is typically significantly different. You may be held legally and financially accountable for a whole range of problems that your client believes originates in your professional engagement. A ‘forgive and forget’ attitude may be unlikely in today’s harsh business world.
If you’re sued and subsequently lose a case for things such as:
• accidental breach of confidentiality;
• loss of your clients’ data or documents;
• product liability;
then the results for you, financially speaking, may be catastrophic.
Getting an IT contractor’s insurance quote that includes PII (Professional Indemnity Insurance) may be the first step on the road towards having insurance that may typically protect you from the worst of the financial risks should any of the above come to pass.
Taking the time to look closely at an IT contractor’s insurance quote may open up your eyes to both your risks and, perhaps more importantly, what you can do to protect yourself against them.
IT consultants’ insurance is a form of Professional Indemnity Insurance (PII).
It exists to offer financial protection to IT professionals against claims from their clients that they were somehow negligent when carrying out their work and that this negligence cost their client money.
It’s not just producing bug-free programme code that an IT consultant may have to worry about. There are a number of other different roles and activities within the broad term IT contractor including:
- management consultancy;
- business process re-engineering;
- systems design;
- project management;
- web based consultancy and design.
Any of these activities may give rise to claims for negligence based on:
- loss of documents or data;
- breach of client confidentiality;
- product liability;
- unintentional infringement of intellectual property rights.
If your clients claim there are errors in your work that have caused them financial loss or that your work has in some other way been substandard or negligent, then they may decide to sue you.
What happens then may vary, depending on whether or not you have professional indemnity insurance protection behind you.
If you do, then you may expect that typically, and up to set limits, any award will be covered by your insurance as well as your legal costs. It may be worth noting that legal fees may be covered whether you lose or win.
If you have no PII, then you could very well be facing financial ruin, as you would be personally responsible to pay the damages and very probably the legal fees.
PII for IT contractors is not a compulsory form of insurance cover in the way it typically is for medical practitioners or legal professionals. However, given the size of potential awards for damages, particularly if you compare these to cost of an annual premium, it may make good financial sense.
Whether you are a consultant offering advice or a hands-on programmer, IT consultants’ insurance may be able to help you handle the implications of being what you are.
Remember too that once the job is done and your contract terminates, you may still be held liable if things go wrong further down the line.
So if, for example, you wish to cancel your IT consultants’ insurance or perhaps change insurance provider, then you may need to ensure that there is specific contingent cover provision for this situation.
Experience shows that problems resulting from failures in Information Technology may be all too common. As an IT contractor, while you obviously may take great pride in the quality of your work, if you don’t have IT contractors’ insurance then dismissing these issues as someone else’s problem may be a bit short sighted.
IT contractors’ insurance is a form of Professional Indemnity Insurance (PII).
PII exists to protect professional working people in many business areas from being sued for damages by their clients.
Why it’s important
There are possibly some businesses still around which don’t use information systems of some sort. However, these may be few and far between.
Many companies have a substantial financial investment in the IT infrastructure that may not just support their business but actually be an integral part of the business process itself.
Being able to deliver to customers and clients is crucial to the success of any business and a failure to achieve that can be a financial disaster. If the company’s IT doesn’t function correctly then one of the first things that may suffer is that ability to deliver to the customer.
Of course if this scenario comes to pass, then understandably the company directors may be looking round for someone to blame and possibly to recoup some of their losses.
If they think that the responsibility for their problems rests squarely on your shoulders then you may find yourself on the wrong end of a damages claim alleging that your error or negligence was the cause.
Even if their assertion is subsequently proved to be unfounded, you may still be facing the prospect of having to pay for the legal fess you incurred defending yourself.
This is where IT professionals’ insurance cover could be invaluable.
Level of cover
It’s important to get this right.
The amounts that may be awarded against you can, in some cases, be staggeringly high. The small savings on premium costs achieved by selecting a less than appropriate PI insurance policy may in some cases pale into insignificance when viewed against any shortfall between an award and the amount that IT PII cover could pay out.
Unlike PII for some other professions, IT contractors’ insurance is not compulsory in many situations. It may, however, help protect you in what is becoming a more and more litigious business environment.
If you are considering IT contractors insurance, then you are making an important, – and some may say, valuable – decision. This professional indemnity insurance may help act as a financial buffer for your company against claims from third parties, as well as help with legal fees.
What are its benefits?
Professional indemnity insurance provides your business with protection in respect of any legal liability which arises out of the exercise and conduct of your business.
There are different types of professional indemnity insurance policies available for businesses and contractors, all which are designed to help minimise any financial loss (which in turn may help reduce personal stress) if a claim is made against you.
In the event of a successful claim, typically the policy can help defend a claim against you as well as cover you for any damages 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 for damages.
So, where can you buy IT contractors insurance? It may be worth considering buying the cover from a specialist provider. Buying it from someone who has expertise within your particular sector may help you find the right product, rather than trying to go for an “off-the-peg” type of policy that a traditional or mainstream insurer may offer.
So, what do you need to bear in mind when choosing your insurance?
First of all, do note that as with most insurance policies, generally you will be liable to pay an excess on your policy.
Look at the terms and conditions as well as any limitations, to see exactly what the policy will cover and any obligations you may have in order to take advantage of the protection.
With the different levels of cover often available, it is important that you choose the right one to ensure you are adequately protected. For example, some clients may expect your company to have a minimum amount of personal indemnity insurance in place before they will allow you to carry out work for them.
As touched upon above, policy terms and conditions for your IT contractors insurance may typically vary among the different providers, so check the small print to confirm the amount of cover you have; any excesses; and how long a policy must be in force for before you can claim.
Finally, to protect yourself and your livelihood does not have to be a time consuming exercise. A specialist provider of IT contractors insurance may help find you the right solution for your business quickly and cover can often be bought online. Finding out more may be a sensible idea.
As an IT contractor you are responsible for many different aspects of your clients and as such you may be a prime target for lawsuits or claims against yourself, or your company. With this in mind anyone who runs a business managing data and advising on the IT matters of others may wish to consider IT contractors insurance. So how might this insurance help you?
Let’s first take a look at some of the many things that your IT contracting company may be faced with.
Your client’s data
Firstly, information technology means you are working with your client’s computers and telecommunications systems which store large amounts of data. If something were to happen to this data such as it falling in to the hands of someone else, and it was in your safekeeping, you might face legal action. If your IT contractors insurance covers data loss, typically you have your insurance policy to help you when it comes to court costs (up to set limits of course).
Accidental breach of confidentiality, libel and slander
The same policy may also provide protection in the event that you breached confidentiality. Again the company or person you are working for may sue you, and without insurance, courts cost, including any awards made to the other party, typically have to come out of your own pocket. These may add up to a large sum, which in the worst case scenario might see you losing your business.
Your clients might also take you to court for libel or slander (if you accidentally wrote or said something about your client that was incorrect and / or which had a negative effect on their business) – again the typical insurance policy for IT contractors may provide financial protection in cases such as this.
Public Liability Issues
Public liability insurance may be included in with your IT contractors insurance, or you may have to pay a little more to purchase it separately. If your contracting job brings you into contact with the public, this insurance may be well worth having. If a member of the public was injured and it was seen to be your fault, a court case may be taken out against you. The insurance can help with the bulk of the associated costs of having a claim made against you, even if it doesn’t cover them all. When taking out the insurance or indeed any insurance, always check the small print of the policy. There are always limitations as to how much the insurance policy pays out in the event of a successful claim.
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.
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.
As an IT contractor, it may be advisable to consider the benefits of IT contractors insurance cover.
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.
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;
- 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.
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.
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;
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.
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.