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What insurance do IT contractors need?

01/02/2019

Business man under questionmarks 367152794_Image used under licence from Shutterstock

Business insurance. For IT contractors, we’re guessing it’s low on your ‘to do’ list.

Because sorting out what policies you actually need can be a headache. And we know from our research, you’re stressed enough already.  

So, here’s a quick run-down of the different kinds of insurance IT contractors might want to get. Why, and what they cover. 

Professional indemnity insurance

Chances are, clients will insist you have professional indemnity insurance. In fact, you’ll probably find it’s a condition written into your contract.

But it’s worth having anyway. Because as an IT contractor, you offer a professional service to clients. And that means, you can be sued for negligence.

In other words, if you make a mistake, or leave something out, and it costs your client money, you could be slapped with a suit.

Without insurance, negligence claims will cost you. Big-time, possibly. And if you’re found to be at fault, you’ll have to pay compensation, too.

Even if you haven’t made a mistake, you still have to defend yourself. Your reputation’s on the line. And damage to that, could affect the number of contracts coming your way in the future.

Professional indemnity insurance will fix what’s gone wrong, pay your legal fees and compensation, if you’re liable.

Because it doesn’t matter how good you are at what you do. Errors are human. And so are you.

IT contractor insurance requirements don’t stop there

Employers’ liability insurance

Got anyone working for you? Even if you only have one member of staff, you need employers’ liability insurance. That’s the law. But it’s for a very good reason.

Say an employee gets injured or falls ill working for you, and your business is held liable. You’ll need more than a bandage to make it all better. 

Without insurance, you’ll have to find the cash for any compensation due yourself. And the legal costs of dealing with a claim, too.

Employers’ liability insurance takes care of these costs for you.

And it’s good for employer-staff relations. Having an employers’ liability insurance certificate up on your wall, tells employees you take health and safety seriously.

Of course, you may not employ anyone now. But if you’re thinking of hiring in the future, bear in mind you can be fined £2,500 each day you’re uninsured. And £1,000 if your insurance certificate is not displayed.

You don’t need employers’ liability insurance if you’ve got a limited company and the owner’s its sole employee.

Or, if it’s an unincorporated family business employing closely related staff members.

But if you’re not sure and need more info on the rules and regs, the Health and Safety Executive (HSE) has a handy guide.

Public liability insurance

Do you work at your clients’ offices? Do they come to yours? If so, you should think about getting public liability insurance. It covers your business for claims made by third parties for injury to themselves, or damage to their property.

All it takes is a client hurting themselves after tripping over a loose cable, or knocking your mug of tea all over their laptop, to find yourself facing a claim.

And if solicitors get involved, you’re looking at legal fees, plus compensation. Ouch.

Without public liability insurance to cover those costs, the damage to your own wallet could be seriously painful.

Office and business insurance

All that stuff you have in your office… It’s not just the obvious things like your chair, desk and computers, office and property insurance protects. It covers everything from your pencils to your potted plants.

Think about it. It would cost a lot to replace, if you had to, right? And if you can’t work while you’re without it, you could lose business, too.

You may even have things in your office that you don’t actually own. Equipment you’ve hired or borrowed maybe? An office and property general contents policy covers these too. Even if the loss isn’t because of a burglary, but a light-fingered visitor.

You want to get portable insurance to cover your mobile, laptop and any specialist electronic equipment you need with you when you’re working.

As an IT contractor, that could be anywhere. Your client’s office, your favourite café, under a palm tree on the pacific. Your laptop and smartphone mean you’re in the office, even if you’re not.

Trouble is, taking them out with you, increases the chances they’ll get lost, dropped, or stolen. And then how do you work?

Portable insurance protects anything electronic and carry-able that you use for business. Anywhere in the world. It covers accidental loss, accidental damage, malicious damage and theft.

Business interruption insurance

Business interruption insurance is what keeps you working when your office is unusable.

It may sound unlikely, but what would you do if the place you usually work was damaged by flooding. Or a fire? Or there was a major break-in, leaving you without monitors, hard drives, printers, laptops and phones?

A business interruption policy gets you up and running somewhere else, fast.

If you need to relocate, it’ll cover your moving costs and the extra rent you have to pay. And if you have to lease more equipment, your policy will pay for that too.

If you are unable to work for a while, it’ll also cover lost income. Making up the difference between what you earn, and what you’d usually expect to earn, during that period.

Cyber liability insurance

“I’m in IT”, you’re thinking. “Why do I need cyber liability insurance?”

The short answer? Because cyber crime’s up by 63%. (Don’t take our word for it. The Office of National Statistics says so.) And because being in IT doesn’t make you immune.

You know, better than anyone what hackers are capable of. In fact, the rise in cybercrime’s one of the reasons IT professionals are so stressed. 

We found out from our survey that clients are relying heavily on you to keep their cyber defences strong. And as if you’re not working long enough hours already, they’re often expecting you to be on call 24/7.

That leaves you with little spare time to make sure your own systems are constantly protected. And your clients’ sensitive data is safe.

Cyber liability insurance covers the costs of a hack. These include: system repairs, data recovery and income you lose while you’re offline; your legal fees and compensation if you get sued for losing someone’s data; lost income if the attack stops you doing business; and PR to restore your client’s faith in you.

At least if you’ve got cyber liability insurance, you’ll have one less thing to worry about. If you’re hacked, your business will recover. And because your reputation will stay intact, you’ll still win new contracts.

IT insurance options

So, what business insurance does an IT contractor need? Guess you’ve already worked out it depends on your particular business needs.

We can arrange essential cover for you starting from £6.42 a month. And build an insurance package to suit you.

Get a quote online in under two minutes.

Or pick up the phone. We’re here Mon-Fri 9-5.30, on 0345 561 0320.

Then you can cross insurance off that ‘to do’ list. And go and do something less stressful instead.

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