Understanding IT consultants insurance plans

November 2, 2009 · Filed Under IT Consultants Insurance 

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.

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