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!
IT contractors insurance – how it may help your business
As a professional person, you are at risk in terms of the services you supply. IT contractors insurance could be one way of protecting you from those risks.
Professional liability
Although we may not always like it, the reality is that we live in a litigious world.
Your clients today may be very keen to demand that you pay for your mistakes that resulted in them suffering financial loss – ‘forgive and forget’ is now frequently an attitude of the past.
Equally, as modern technology has increased our communication capabilities, it has also arguably increased the risk of your statements and comments getting into the public domain. This may easily lead to demands that you accept accountability for erroneous or libellous statements, the accidental release of confidential information or defamation.
As an IT contractor, there is also a fair chance that you’ll have heavy exposure to your client’s data – lose it or accidentally release it to an unauthorised person and you may find yourself going through the legal compensation process very quickly indeed.
IT contractors insurance
Professional indemnity insurance (PII) may be a way of reducing your financial risks should you be on the receiving end of a large court award for one of these (or other) circumstances.
A summary of some of the circumstances covered typically may or may not include:
• accidental breach of confidentiality;
• loss of confidential information;
• product liability;
• libel and slander;
• defamation;
• dishonesty;
• unintentional infringement of intellectual property rights.
It may be worth remembering that the point is not whether you believed you slandered someone or behaved dishonesty – but only what a court believes and awards.
The awards can also be high – well into 6 or even 7 figures depending upon the circumstances and severity of the problem.
Our services
We offer IT contractors insurance that typically covers a wide range of situations and circumstances. It can also provide public liability insurance in case you are unfortunate enough to be sued for injury or damages sustained by a member of the public while you were providing your services. Finding out more from reading further on our site may be a good idea.
Why you may need IT contractors insurance
Many professionals and companies may never have even considered what professional indemnity insurance means, while others may have heard of it but never bothered looking into the subject. But it is typically available through conventional IT contractors insurance packages, and in some circumstances may save a business or individual hundreds of thousands of pounds or more.
Professional indemnity insurance may provide cover as part of a general IT contractors insurance deal, and in some circumstances might be referred to as business insurance, or, as part of a business insurance package.
Normally it may protect against claims for loss or damage by a third party or a client and relates to mistakes, real or perceived, made by you in the conduct of your business.
The deal may sometimes apply to one individual person, ie one freelance IT professional, or a company as a whole.
Often a deal may protect against legal claims that you have made a mistake, committed an act of negligence, or a general error in your work. For example, you may incorrectly install a software system which needs to be redone, costing a client money. In such circumstances they may decide to take legal action to recover any money they have lost.
In the past professional indemnity insurance used to be mainly associated with the likes of architects, doctors, and accountants. This was because some of them need to have it in place in order to qualify for membership of trade associations, or to abide by the law.
But it has become popular with other trades, specifically because of a heightened legal awareness which means clients may be more likely to sue if they feel they have been wronged.
IT contractors insurance comes with a policy payout limit, beyond which it may not pay for any more legal fees or compensation costs. Often selecting this limit is important, as if it is too low you may end up under-insured in the middle of a court case and have to pick up the rest of the bill yourself. On the other hand, if you end up over insured, you may be paying for a level of IT insurance protection you don’t really need.
Choosing an IT contractors insurance plan
Working out the administrative side of things can be tricky for many businesses, and IT contractors may typically rather get down to their contractual work than spend hours sorting out business insurance plans. However, IT contractors insurance may allow a professional to work with added security.
This kind of cover may feature professional indemnity insurance, often known as PII. It may be useful for a number of different consultants and not just IT professionals. It may pay your legal costs including compensation in the event you are taken to court - referred to as being sued, by an unhappy client.
Typically this can refer to mistakes made in the conduct of your general business. For example if a drive is wiped by accident, costing a client a considerable amount of cash - in which circumstance they may decide to take court action in an effort to repair their ‘financial injury’.
Some businesses need PII in order to achieve membership of industry bodies or in order to fulfil legal requirements. This may not be the case for IT contractors, but a policy may be more than sensible.
Unless the business has considerable cash reserves put away, they may find burden of a court case and its associated solicitors and compensation costs too much to bear.
IT contractors insurance with indemnity cover may pay your legal costs up to a set ceiling which is laid down or the policy agreement. This amount is often decided with your input so the excess means you need to make a decision as to how much cover you really need. A firm may do this by judging their client base and the size of their regular contracts.
Payouts are not based on whether or not the claim made against the company is valid - you may get a pay out regardless of whether or not the accusation levelled against you is valid or not. Generally insurance like this may cover accusations you have defamed somebody, made a costly error in your work, acted negligently, or breached confidence or copyright accidentally.
IT contractors insurance often also protects against claims that you or your employees have acted dishonestly and perhaps stolen from a client, for example.
Using IT contractors insurance as a guard against legal action
Some businesses tend to operate from one month to the next without keeping much aside, while other perhaps large organisations have considerable cash reserves. But whatever a company’s balance sheet looks like, they may struggle to pay for an expensive legal case if they face a formal action. This is why professional indemnity insurance has become popular with outside consultants including information technology pros. IT contractors insurance is geared to provide specialist cover for those who work in the sector.
This kind of cover is worth considering because a mistake while completing a job for a client can lead to a business losing a considerable amount of money. Erroneous advice or a slip during a high profile installation can both lead to a formal complaint or being sued in certain circumstances.
IT contractors insurance normally includes an element of professional indemnity cover, which will essentially pay for the cost of someone’s legal defence if they ever do face a case. Normally it protects against solicitor’s fees in the event the policyholder is accused of an unintentional mistake in the general conduct of their business.
This normally includes allegations they have made a mistake, error, or simply omitted something which they should have included in advice or an installation. It also covers slightly more complicated legal matters including allegations that the policyholder has accidentally breached someone’s copyright or confidence, or defamed somebody through libel.
It will even cover allegations that you or an employee of yours has acted dishonestly – in the event there is an accusation of fraud or stolen data, for example.
IT contractors insurance typically comes with flexible policy limits, as no insurer will pay out indefinitely towards legal bills. So a firm which has less high profile clients may want a policy limit much smaller than a firm which deals with several multinationals, and the policies are often priced accordingly. The good thing about this type of cover is it will not matter whether or not the claim against you is valid or not – protection will be included in any case and will even cover the cost of compensation which is awarded against you.
Using IT contractors insurance to protect against court cases
From internet marketing to installing wireless networks, there are now all sorts of reasons why firms might require outside help with information technology – and that means getting in consultants either for the short or long term. Even smaller companies or individual freelances can make a big difference to a company, but they themselves will need to make sure they have planned ahead to provide a good service – one of the first things many consider is IT contractors insurance.
Professional cover is taken up by businesses to protect against all sorts of eventualities. Depending on where and how they operate some firms will need public liability insurance, for example, while others won’t. Others will need a form of professional indemnity insurance, which can protect against legal hurdles which can come up when completing consultancy work.
IT contractors insurance can include both public liability and professional indemnity in one policy and can come from a wide range of insurance firms. All deals which include professional indemnity often run along the same basic principle – paying out in the event the individual firm or policyholder faces a legal challenge.
This is often referred to as being sued and can happen for all sorts of reasons. Normally a deal with professional indemnity protects the policyholder in the event they face action due to a costly mistake, typically because it lead to a client losing money.
Typically this is defined as an accusation of an error, omission or act of negligence committed in their day to day business. It also normally applies to claims they have breached copyright, confidence, or even if they have defamed someone through libel. Also normally covered are claims that a client’s data has been lost or destroyed or even that the employee of a contractor has acted dishonestly.
Insurance like this works by paying out to cover the legal and compensation costs arising from a case – which in some cases can run to hundreds of thousands of pounds or more. IT contractors insurance will therefore involve a premium as with other kinds of cover but this is calculated according to the maximum payout limit on the policy and the size of the applicants business and clients.