As businesses increasingly turn to IT consultants and contractors for advice, insight, and expertise, it’s essential that you have business cover like IT consultant insurance in case something goes wrong.
If you have worked on contracts in the past, you might already be familiar with professional indemnity insurance (many contracts require you to have it before you can start work), but there are other types of cover you might want to consider to avoid being surprised by a nasty claim.
Professional indemnity insurance
If you work as a developer, project manager or do any type of IT contracting, the chances are you’ll have had to arrange professional indemnity insurance at some point in your career. It protects you in the event you make a mistake in your work, covering the legal costs in defending the claim and any compensation payments that may be needed to put the mistake right.
Sometimes it can be difficult to see how making a mistake could lead to a claim. In many instances, it’s the additional costs that your client incurs due to the mistake that they are likely to seek damages for. A database migration that goes wrong could cause an interruption in business for your client, leading to lost sales. A delayed project could mean a client misses a time-critical commercial opportunity. Something as fundamental as poor file architecture on an e-commerce application can take weeks, if not months, to fix.
Although it can seem like a chore having to buy professional indemnity insurance, the costs involved with putting right a mistake can easily run into the thousands; without cover you may have to pay this bill yourself, so it’s a worthwhile investment for most.
Public liability cover
Working at a client’s premises can be a risk in itself – if you are using a loaned laptop, spilling a cup of tea or coffee over it could see you presented with a hefty bill for a replacement. Public liability insurance covers the cost of damage you cause to third party property, and also any injury you cause to members of the public.
Covering your devices
With more and more organisations switching to BYOD, taking a laptop to and from work can be a hazard. It can be all too easy to drop it on public transport or while getting it out of the car – and the cost of a well-specified replacement could run into four figures very easily. Business equipment insurance can cover your laptop on a worldwide basis, so you’ll not only be covered outside of your home, but also if you travel overseas to other offices. It can also provide cover for expensive peripherals or devices you might have, like an iPad or smartphone.
Operate as a limited company?
If you run your business as a limited company, you may want to consider directors and officers insurance. It covers you in your capacity as a director against allegations of wrongdoing, including breach of trust or confidentiality. This could include, for example, if there are allegations you passed on confidential commercial information to a competitor, or allegations of committing fraud (of course, if any wrongdoing was deliberate, this wouldn’t be covered by the policy). Many directors assume that they are limited in their liability to the company, but this isn’t entirely true – you can still be held personally responsible for your actions, which means that if legal action is taken against you, your own personal wealth could be at risk.
While it might seem unlikely that you would ever be in the position where a claim was brought against you, they can be made at any time – even months or years after the alleged error has taken place. When you are notified of a claim, it’s important you let your insurer know as soon as possible. They will be able to guide you through the best course of action to defend the claim and allow you to concentrate on running your business as normal.