Why is IT consultancy insurance important?
As an IT consultant you may be involved in a number of different areas of expertise - cyber, integration, migration, etc. - bearing a certain level of responsibility. That comes with risks which is why professional indemnity insurance for IT consultants is a critical cover whether or not required by a contract.
Technology sits at the heart of most business these days and the role of an IT consultant is usually strategic to any client who hires one.
If you are working in that role, either as a contractor or delivering services as a company, it is likely that your clients rely on you for advice, direction and expertise they themselves lack. And they expect that what you deliver will just work. Of course this is not always the case and that is when disputes may arise.
The list of reasons is extensive but the main causes for disputes usually revolve around the following:
- Unclear briefs: mismatch between your understanding of what is in scope and the client’s expectations
- More work required for free to rectify an issue, either as a result of the above or a mistake
- Demands of compensation due to delays, errors, or incomplete work causing financial losses
- Leak of sensitive or confidential information
In IT consultancy the risk of facing one of the above or another issue resulting from providing advice in the technology space has increased directly in line with the uptake of technology in pretty much every industry.
How does professional indemnity insurance for IT consultants work?
When a complicated situation arises, there is a threat to your bank balance due to the defence legal costs you’ll incur, a possible compensation payout and the loss of future work as a result of the time required to resolve the issue.
The stress elements is also a life changing factor. Though work related it can have a negative effect on the rest of your life.
A good professional indemnity coveris first and foremost a peace of mind. Typically when you make the call or send the first notification to your insurers, they will review your case and appoint the right legal advisor to walk you through the next steps or act on your behalf if appropriate. This is usually very helpful to your state of mind as you are receiving support from someone who has done this before but also saves a lot of your time. Your legal representative will usually conduct all the correspondence and negotiations.
Knowing that you can rely on experienced legal experts to take on your defence and on your insurers to deal with the costs, you can get on with your job.
If you decide to buy professional indemnity insurance, make sure you understand the claim process before purchase. All of us hope we will never need a reason to call our insurers but when we do, we want to be confident that they can deal with the claim efficiently. This is ever more important when it comes to legal threats to your business or work.
IT consultants often set up limited companies which can place them in the grey area of the IR35 legislation.
This is why Suited professional indemnity cover also includes £100,000 of legal expenses that can help with the cost of tax investigations.
What to consider when buying professional indemnity insurance for IT consultants
When required to have professional indemnity insurance by contract, IT consultants tend to do a quick internet search and pick the cheapest. However, as explained above this legal cover can play a vital role if you find yourself in a legal dispute with your client.
Limit of liability (indemnity)
Often enough IT consultants require to hold professional indemnity insurance and the contract will stipulate what the limit of the policy should be. There are other considerations before deciding how much PI insurance you need.
Claims process
Knowing exactly what would happen if you needed to defend yourself against a client accusation of negligence or a professional mistake is paramount. You don’t want to be caught short by not having followed procedure or fulfilling certain requirements of your policy. The insurance provide you select to purchase should have this information easily accesible before you buy.
Insurers rating
It is often tempting to purchase the cheapest deal on the market. However, double check not just who you are buying from but the actual insurers underwriting your policy. This information should be made very clear to you before purchase.
Future changes
From time to time updates to your personal or business details are needed. Make sure you understand whether there are associated costs. This goes for cancellations too. Will you have to pay a fee and will you have to give 30 day notice rather than just be able to cancel immediately?
Hibernation option
IT consultants in particular are exposed to risks of their past work. Technology mistakes can sometimes take months or even years to uncover. If you are not planning to take on another contract straight away, you may want to stay insured for your past work rather than cancel your professional indemnity insurance.
Your insurance provider should be able to offer you a ‘hibernation’ option to help you save money and then change back to a full cover as and when you are back at work. With Suited do exactly from the comfort of the DIY customer portal.
