With more and more IT professionals choosing to work as contractors rather than in long-term roles, insuring against the risks in the IT industry has never been so important.
Here are five reasons IT contractors need professional indemnity (PI) insurance.
IT contractors face a whole range of risks, even if they are not immediately obvious. Coding errors, failure to deliver projects on time and breaches of contract are just some of the claims that have cost IT contractors much more than an unhappy client.
Worryingly, trust in tech companies has fallen over the past decade, according to the Edelman Trust Barometer 2021. A lot of this is likely due to a crisis in confidence regarding social media.
Almost two-thirds of tech companies surveyed by commercial insurance brokers Marsh Commercial believe that establishing greater trust among customers, employees and business partners will help to moderate the cost of managing risk. Nevertheless, PI insurance for IT contractors is vital. Here are five reasons it is so important to arrange the right cover for your business:
- No insurance, no contract
Many contracts require you to have PI insurance, which limits the cost to the employer if you do make a mistake. Clients may be reluctant (or even refuse) to hire you without PI insurance. To have the best chance of getting a contract, arranging PI insurance is a necessity.
- Claims can be costly for IT contractors
A claim for an error or omission in a project could cost anything from a few hundred pounds to hundreds of thousands. If you are uninsured, you will have to foot the bill for legal fees and compensation, which could leave you financially vulnerable in the event of a claim.
- Mistakes can happen
Regardless of how many years’ experience you have, it’s impossible to know what will happen on your next project; it only takes one mistake for a claim to occur. For complete peace of mind, buy insurance that will cover an allegation that you have made a mistake in your work (PI insurance), as well as injury or damage caused to third parties (public liability insurance).
- Most employment agencies won’t cover you
While employment agencies can help you to find your next contract, their insurance is unlikely to cover the work you carry out on a project. Be sure to check whether you need to arrange your own insurance before you start.
- Protect against the unforeseen
Having a laptop and its accessories stolen would not only cost you hundreds of pounds to replace them but could also delay time-sensitive work for clients. This could put serious strain on your relationship with them and lead to a claim for failing to deliver a project on time. Even worse, if there is confidential data belonging to the client on the stolen laptop, they could make a claim against you for negligence.