Business insurance for IT contractors & consultants

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    Chris Godfrey

    Page written by Chris Godfrey. Last reviewed on April 26, 2024. Next review due October 1, 2025.

    In an age when almost every business uses technology to function, the need for expert IT professionals to provide support has never been greater. However, while IT contractors provide the technical skills and IT consultants provide guidance and planning, they all have one thing in common – they’re vulnerable to potential compensation claims that could run into the many thousands or even millions of pounds if things go wrong.

    Specialist business insurance for IT contractors and consultants can protect tech professionals from financial claims for data leaks, errors in information, systems malfunctions, accidents, personal injuries or property damage and more. It’s an essential tool of the trade.

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      Why do IT contractors need insurance?

      IT contractors are at the sharp end of the business, working with expensive equipment and sometimes being responsible for the safe handling of data worth millions or even billions of pounds. Additionally, they are often working off-site and exposed to the risk of causing damage to third-party property or even personal injury to others. Consider these examples:

      • Data breach – you or one of your employees inadvertently leaves a backdoor open to hackers and cyber thieves. The resulting data breach costs the client many thousands in lost revenues and repair costs. They make a claim against you or your business for the financial fallout.
      • Systems failure – rushing to beat a deadline, your systems upgrades are not tested in every scenario. When the beta version crashes the whole system, the client is unhappy and looking for someone to blame and to pay for the damage. Guess who that will be.
      • Accidents – you are working at the client’s premises and one of their employees trips over your equipment and breaks their arm. A claim for personal injury is forthcoming as well as a demand for compensation for lost income and medical care.

      Why is Insurance for IT consultants important?

      While IT consultants are more engaged in the strategy, planning, design and management of technology services, it doesn’t mean they are any less exposed to risk than IT contractors. The information and advice that consultants provide can affect or implement business services worth many millions of pounds.

      One simple mistake could cost the client a fortune and it is almost inevitable that they will seek compensation from whomever they believe was at fault. Consider these examples:

      • Errors and omissions – the information you provide for a systems-wide upgrade of a client’s network inadvertently includes outdated data. When the upgrades cause more harm than good the client immediately holds you or your business responsible for the problems. They file a compensation claim for more than $1million. 
      • Legal exposure – you are holding highly confidential client data. When one of your employees accidentally shares a client file with the wrong party, their groundbreaking technical advantage is suddenly public knowledge. The client files a claim against you for illegally sharing their data.
      • Equipment loss – the special technology you rely on to perform your work is lost in transit to the client’s location. Not only must you pay to replace the equipment, now you can’t perform your services and your client misses an important deadline. They make a claim against you for lost revenues.

      The fact is, small and large problems can arise anytime, anywhere, and they have the potential to derail even the most diligent and safety-conscious IT contractor or consultant. The financial impact of even minor incidents can be high, and the unwanted distraction and weight on your valuable time can only make the outcome harsher. IT contractors’ and consultants’ insurance not only takes care of the costs and legal arguments it can also give you peace of mind. 

      What does IT consultant insurance cover?

      IT consultant insurance is an umbrella term for a range of policies that can protect consultants and contractors against almost any risk. Essential cover includes:

      Professional indemnity insurancecovers businesses and individuals that advise clients, help them navigate complex financial or legal affairs, or provide them with vital information that may be published in the media. Professional indemnity (PI) can protect you if a client makes a financial loss because of fault in your work and then makes claim against your business. Trade associations, government bodies, public institutions, and major customers will often require proof of a minimum level of PI insurance before doing business with you.

      Public liability insurance – protects you if someone is injured, or their property is damaged because of the services that you or your IT business provides. This type of cover is designed to protect your business against third party claims for injuries or property damage from a customer or client, passer-by, or a visitor to your premises – whether you’re at fault or not.

      Employers’ liability insurance – this is a legal requirement for most US employers. It protects you and your employees, (including those who no longer work for you), should they be injured or become unwell as a result of working for your business.

      Data breach and cyber-crime insurance – covers the costs if you or your clients suffer financial harm as the result of an accidental data breach or leak, or the malicious intentions of cyber criminals. Cover may also provide the support of cyber-crime experts to restore lost or damaged information and systems.

      Business equipment insurance – protects you in the event that your important equipment, including laptops and mobile phones, are lost or damaged by theft, fire, flood or vandalism.

      How much does insurance for IT consultants cost?

      The average cost of IT consultants’ insurance is $46 per month, but costs will vary depending on the size of your business, your clientele, and the type of information, advice and services you provide.

      How Swoop can help

      All business involves risk, but that doesn’t mean you have to suffer the consequences if things go wrong. Don’t let bad code, missing data or a cyber breach crash your IT business. Contact Swoop today to compare top-quality IT consultants’ cover from different providers and to discuss all your business insurance needs. 

      Written by

      Chris Godfrey

      Chris is a freelance copywriter and content creator. He has been active in the marketing, advertising, and publishing industries for more than twenty-five years. Writing for Wells Fargo Bank, Visa, Experian, Ebay, Flywire, insurers and pension funds, his words have appeared online and in print to inform, entertain and explain the complex world of US consumer and business finance.

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