In the past few decades, the explosion of information technology has filtered into every area of our daily lives. Today, almost every member of every household and practically everyone working in a business setting accesses some form of IT system.

This requires those working as IT contractors, to generally be engaged by a third party to provide a service or product to suit homeowners or businesses’ needs.

Why Do YOU Need Insurance As An IT contractor?

With the rapid expansion in demand for IT systems and an ever growing reliance on sophisticated hardware, IT contractors are becoming increasingly at risk of being held liable for their work and their products.

Handling large volumes of valuable data, having to work to strict deadlines and being required to offer advice and expertise all bring a high element of risk and inevitably there is potential for mistakes, delays or accidents to occur.

Due to the fact that IT contractors often provide both a product and a service (usually in the form of advice or training), different types of insurance are generally needed to cover them again all potential claims.

It’s highly likely that you would not be considered for a potential IT contract without the appropriate insurance so it’s essential that you cover yourself in order to gain business and keep you and your clients safe.

You need insurance as an IT contractor if you offer any of the types of services listed below:

• IT Education and Training
• Data Communication Services
• IT Systems Analysis
• Search Engine Optimisation
• Software Sales
• IT Recruitment
• Systems Integration
• Website Design
• Web Hosting

How Much IT Insurance Cover Do You Need?

You should always take out as much insurance as you can possibly afford so bear in mind the size of your company and indeed the level of risk that comes with your specific work. So in order to get the best insurance for your IT consulting (or contracting company), you need to compare different policies from several insurance companies.

As well as covering the basics (Professional Indemnity Insurance and Professional Liability Insurance), you may want to insure your business further depending on the structure of your business and the work that you do.

When pitching for new contract, you may find that companies have a specific requirement regarding the level of insurance that they want you to have so bear in mind you’ll always stand a better chance of gaining work if you can demonstrate that you’re completely covered by a strong insurance policy.

Always seek out expert help on this to avoid leaving you and your company exposed to potential claims. It always pays off to double check the small print and ensure that you’re completely covered for all circumstances.

The amount of insurance that you need may also vary depending on what state you’re in or the country where the majority of your clients are so bear this in mind also. Make sure you comply with all necessary regulations required of you when working as an IT contractor.

What Are the Different Types of Insurance That an IT Contractor Needs? 

Due to the frequent uncertainty over whether the work of IT consultants provides a “service” or a “product” there is some ambiguity and uncertainty over what specific type of insurance is needed.

The best way to approach insurance as an IT consultant is to take out an insurance policy with a trusted insurer that will cover you for both Public Liability Insurance and Professional Indemnity Insurance. These two essential types of insurance are explained below:

1. Public Liability Insurance:

Due to the uncertainty regarding how to categorise the work provided by IT Consultants, it’s generally best to take out both Public Liability Insurance for if and when the claim is treated as a “product”. Public Liability and Products Liability Insurance normally relates to covering claims of personal injury or property damage that arise from the IT contractor working within the public domain- and will address any physical outcomes occurring from faults in the service provided.

An example of when an IT contractor may need to claim on their Public Liability Insurance would be if an injury occurred or a property was damaged as a direct result of a hardware defect or malfunctioning product.

2. Professional Indemnity Insurance:

A large part of any IT contractors role is often providing advice regarding specific software, offering training to staff and new users, or working on the design of IT systems.

If a claim arises around these areas of an IT contractor’s expertise, it is generally treated as a “service” which would not be covered under Public Liability Insurance and instead requires the contractor to have Professional Indemnity Insurance.

The majority of professionals and especially contractors are legally required to have some level of Professional Indemnity Insurance.

For IT contractors, it’s main function is to aid against the financial loss that can occur through incorrect advice or designs and specifications that the Principal will have relied on. Examples of tasks that IT Professional Indemnity Insurance policies will cover include:

• IT Consulting
• Software development
• Education and Training
• Website design

Why Should You Get Multiple Quotes When Looking For IT insurance?

When looking for insurance, it’s always best to find a company with proven experience of working with IT Contractors. By finding a company who know the intricacies of the best Insurance policies for IT contractors, you’ll be working with experts who will direct you to the best cover for your needs.

Ask for recommendations within your industry, and don’t agree to the first policy that you come across. It’s always best to get multiple quotes when looking for insurance – you need to get a variety of quotes from different companies to be able to accurately compare what each one can offer to you, and to find the ideal cover to suit you and the type of work that you do.

Peace of Mind

Allegations and claims made against IT Contractors can have a huge impact on businesses, especially those that operate on a small scale with minimal resources.

Sadly, accidents and unexpected incidents are an inevitable part of IT contracts so give yourself a peace of mind and make sure that you’re fully prepared for if and when they may arise with all the insurance cover that you need.