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Putting your insurance on hold as an IT contractor

21/01/2019

Contract ended?

Thinking about jetting off to your favourite hot spot for a holiday?

You’ve earned it.

We know from our research IT’s become an increasingly stressful industry to work in. And a lot of the stress is caused by the long working hours.

In fact, it’s got so bad, 1 in 6 IT consultants say they’re thinking about getting out of the industry altogether.

But if you’re thinking about having some downtime – even if it’s just a long break between contracts – don’t cancel your insurance. Put it on hold instead.

Why it pays to put your insurance on hold

Most of the time a contract starts and ends without a hiccup. But no matter how good you are at your job, there’s always the risk a client could claim you made a mistake.

Say you cancelled your policy the moment your contract ended.

A month later, tanned and relaxed, you’re sunning yourself at the beach. Not a cloud in the sky, work’s the last thing on your mind. You’re just wondering which cocktail you’ll have tonight, when your mobile pings. It’s an email.

Something’s gone wrong with your last job. And the client’s blaming you.

You go white under your tan for a moment. Then relax. That PI policy you bought for the contract, it protects you from negligence claims, doesn’t it?

Er, ‘fraid not.

Professional indemnity insurance is a ‘claims made’ policy.

What that means is, you’re only protected if you were insured when you did the work and when a claim is made. 

You cancelled your policy, remember? The claim’s come in a month after you cancelled it. So your past work’s not covered.

Forget the cocktail, you need to get off that beach and on the next plane home. Because without insurance, even if it turns out you didn’t do anything wrong, you’ll have to pay for your legal defence.

And if you are at fault, there’ll be compensation to pay to your client, too.

Protection factor 50

Ideal for when you’re between contracts, hibernation means the same in the insurance world as it does in IT. In hibernate mode, your policy stays in place. It just powers down, saving the work you’ve done in the past. (You'll need to power it back up again for any new work.)

What’s more, while you’re flexing your wallet on holiday, you’re saving money. You pay just 50% of your annual PI premium while your policy’s in hibernation.

All you have to do is tell us when you want to put your policy on hold. We’ll do the rest.

Don’t run off without run-off cover

If you’re thinking of quitting IT altogether, look into getting run-off cover. It’s because of this ‘claims made’ thing again.

It can take years for mistakes to surface. When they do, it doesn’t matter if you just quit IT or retired completely. If it’s your fault, the cost of fixing the problem is down to you.

Run-off cover starts when you stop working as an IT consultant. It’s not a full-blown PI policy, so your premium goes down over time.

It won’t cover you for any new contracts, though. Just the work you’ve done in the past. So, if you have a change of heart – come out of retirement, or decide to go back into IT – you’ll need to ramp up your protection again.

There’s no minimum or maximum time IT professionals are expected to have run-off cover. Six years from the alleged incident date is the limit for claims. Whether that’s too long or too short a timeframe is your call. Have a think about it.

Or, if you’d like some advice, just give us a ring.

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