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.
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