The basic points of IT consultants insurance

September 7, 2009 · Filed Under IT Consultants Insurance 

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.


Leave a Reply