Most contracts you will engage with as an IT consultant will stipulate you must have and show proof of professional indemnity insurance.
Depending if you use an umbrella company or contract directly you may be exposed to IR35 enquiries from HMRC. Regardless of how you're engaged you still could be subject to late or non-payment of invoices.
You are likely to use your own laptop or computer for your work, if that gets stolen or damaged could you afford the repair or replacement costs?
An unhappy client may allege your advice or recommendation ended up costing them money which they now want to recover from you.
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What insurance do IT consultants need?
Choosing the right insurance for you depends on the size and nature of your business. Key insurance covers IT consultants should consider include:
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 cover is 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.
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.
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.
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.
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?
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.
When you decide to protect your business with Suited we want you to get more than just insurance. That's why with every policy subscription we include Business Legal Protect. From the moment you sign up you gain access to extra support services which are all part of our price.
- IR35 & HMRC investigations
- Legal matters concerning your business
- Negative PR (£25,000 cover)
- Criminal prosecution
- Compliance & regulation issues
- Unpaid invoices (over £200)
- Free tax advice
- Free commercial legal advice
- Counselling for you and your staff
- Access to a legal template library
- Identity theft assistance
My work contract requires professional indemnity insurance. Suited were quick to call back and very helpful explaining the product to me. Suited offers a trustworthy, professional service and a peace of mind.
Suited was easy to use, to the point, concise, I found everything I was looking for , was covered. The process was efficient and quick. Fast forms to fill in. I think the price was pretty competitive too.
The fast and hassle free way to get business insurance for small professional outfits.