What is IT consultant’s insurance?
IT consultant’s insurance is a form of cover aimed at protecting freelance professionals operating within the field of IT.
It’s a form of Professional Indemnity Insurance (PII) but with some added protection that may be included.
Some professional indemnity insurance policies may or may not contain financial protection against the consequences of:
- tax and VAT investigations;
- professional indemnity actions;
- employer’s liability and public liability exposures.
TAX and VAT investigations
HMRC (Her Majesty’s Revenue & Customs) may require you to attend a meeting (or other form of informal, formal or legal hearings) in relation to your taxation affairs.
This may be expensive, particularly if you need to appoint an expert to handle your case and discussions with HMRC on your behalf.
In some cases, this component of IT consultant’s insurance may typically help with components of those costs.
Professional indemnity claims
Your clients may, perhaps understandably, hold you to be accountable for the quality and integrity of the services you provide to them in return for your fee.
If something goes wrong and your client subsequently believes you have performed negligently, then they may take legal action against you for damages.
Examples of such claims may include things such as your unintentional infringement of intellectual property rights, product liability or an accidental breach of confidentiality etc.
The level of awards against you in this area may be staggeringly high – and you may also face legal costs even if you win.
Employers’ and public liability insurance
These are typically two different domains of cover.
Depending upon your circumstances, if you have employees the law may demand that you have employers’ liability cover insurance.
Public liability insurance cover is, as the name suggests, to help protect you against the costs you may incur if a member of the public suffers injury or damage as a result of your activities. In the case of some consultant’s insurance this is purchased separately but some insurance providers may include it in their consultant’s cover as standard.
Protecting your interests
You may be proud of your professional activities and the business you’ve built.
Taking steps to protect your financial and emotional investment might make sense and IT consultant’s insurance may help you achieve that.