Professional Liability for IT Consultants

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Not only does your business insurance need to protect you from lawsuits, but it also needs to include other areas of protection. Furthermore, there are differences between individual types of professional liability coverage that you'll need to be aware of. Here are a few answers to frequently asked questions about insurance for IT consultants.

What Is IT Consulting Insurance?

If you are a freelancer, it will be important to make sure that you carry a policy that is designed with the needs of a sole proprietorship of an individual limited liability company (LLC) in mind. Fortunately, you can rest assured that our professional liability insurance policies are designed for freelancers.

Here are some things to consider when choosing your policy as a freelance IT consultant:

Affordable business insurance: As a freelancer, it's likely that you will already be paying for health insurance. Therefore, it's important to make sure that you are able to find affordable business insurance.
Coverage based on a number of clients: Freelancers need to make sure that they get coverage that's designed for individuals who work for a large number of clients. Policies that only cover individuals who work with a small number of clients will be unsuitable for freelance IT consultants.
Need for small business insurance: In many cases, it's best to purchase small business insurance. That's because these policies are designed with the needs of small business owners in mind, and this helps to ensure that the plan will cover the unique situations that come up with your business as a freelancer.

Will you need a special plan if you have a larger IT business?

It's important to make sure that any policy that you choose is set up with the needs of your company structure in mind. If you are the owner of a medium-sized IT consulting firm, our plans will be great for you too.

In fact, our policies are designed to meet the needs of all small and medium-sized business owners, including professionals in the IT sector.

Your plan will need to cover cybersecurity incidents

Cyberattacks can cost a company tens or even hundreds of thousands of dollars. Not only that, but as an IT professional, it will be your job to help keep the company safe. Therefore, carrying insurance that offers cybersecurity coverage will be essential for your business as an IT consultant.

The following are a couple of traits to look for when it comes to your policy's cybersecurity coverage:

Covers all types of cybersecurity losses: Your cybersecurity policy needs to cover all types of cybersecurity losses. Therefore, you need to thoroughly read over the list of covered incidents. Make sure that it covers everything that you are likely to encounter during your work as an IT consultant.
Designed for cybersecurity professionals: It's important to verify that the plan is designed with cybersecurity professionals in mind. This will help to ensure that sufficient coverage is offered. Otherwise, it's hard to say whether the coverage will be sufficient or not.

What Is the Difference Between Professional Liability Insurance and Indemnity for IT Consultants?

One question on your mind is probably, "What's the difference between public liability coverage and indemnity coverage?" Below is what you need to know about each of these important parts of your policy.

What you need to know about liability coverage

Liability coverage is designed to cover lawsuits that you may face. This is important as the owner of an IT consulting business. A few examples of what liability coverage offers include:

Legal defense expenses: In many cases, the cost of legal defense could be in the thousands of dollars. Therefore, your plan can save you quite a lot of money on these costs. Some common examples of situations where you may need legal defense are: breaches of contract, errors, and omissions. However, an effective liability plan will cover you in all of these situations.
Lawsuits for alleged libel or slander: Libel and slander lawsuits are common in the modern era, and this is especially true for individuals working in the IT sector. If you work with social media, the risk is especially high.
Personal injury resulting from negligence: While physical injuries are uncommon in the IT sector, the risk is not zero.

What you need to know about coverage from a professional indemnity insurer

Professional indemnity insurance for IT consultants is designed to cover financial losses. The following are a few examples of what indemnity coverage will offer:

Protection from court settlements
Indemnity policies designed to protect against court fees
Cost of filing fees

Do you need to have both types of coverage?

You will need to have both public liability coverage and indemnity coverage, and most plans will include both types of coverage. This is the case with all of the plans that we offer.

When choosing a plan, look for these 3 factors:

Coverage for all types of lawsuits: A plan should cover every type of lawsuit that you are likely to face as a professional in the IT sector. This can play a crucial role in protecting your business.
Protection against financial losses: As an IT professional, it will be important to ensure that you have protection against financial losses. Therefore, finding a plan that offers excellent indemnity coverage is essential.
Customer support: If you have any questions about the policy you have purchased, you'll want to be able to easily contact customer support staff to answer these questions.

How Do You Ensure That You Find the Right Professional Indemnity Insurance for IT Consultants and an Effective Liability Plan?

In order to ensure that your policy is right for your business, consider any unique situations that may come up. The nature of these situations will vary significantly from one IT consulting firm to another. However, these are 3 factors to evaluate:

Industry: Your policy should offer insurance for IT consultants who have clients in the same industry that you work with. For instance, if you work with businesses in the communications industry, you will want to find a plan that's designed with the needs of IT consultants in the telecom industry in mind.
Equipment: The cost of IT equipment can add up. Confirm that you can effectively insure all of the equipment that you use.
Business size: Consider the amount of coverage that the policy offers, especially if you have a small business or medium-sized IT consulting firm.

Do Consulting Businesses Need General Liability Insurance for IT Consultants?

You may wonder, "What kind of insurance does a consultant need?" The answer to that question is that consultants will need effective professional liability and indemnity coverage that offers at least $1 million dollars in incident coverage. Fortunately, our plans fit both of these requirements.

Additionally, not only do you need a policy to protect your business, but you also need to offer protection to your employees if you have them. A comprehensive indemnity and liability plan like ours will cover both the company and your employees.

However, it's important to note that there are differences between professional liability and general liability. General liability protects against property damage and bodily injury, and professional liability is designed to cover errors, omissions, and breaches of contract. IT professionals will need both general liability and professional liability.

Is there a deductible?

As with most insurance policies, you can expect to pay a deductible on your liability coverage. This deductible varies between 0% and 10% of the coverage amount in most cases.

How can business insurance protect an IT company?

While there are many examples of cases where business insurance protected a company in the IT industry, one particularly striking instance of this was when a software developer was sued for $1.4 million due to a breach of contract. Luckily, his insurance covered the settlement. However, if he was uninsured, it almost certainly would have led to the business going bankrupt.

What will not be covered?

In some cases, a settlement may be larger than the coverage amount. The excess amount will not be covered. Furthermore, many plans do not cover losses that result from an employee suing the company, but this depends on the specific policy.

What Is the Cost of Professional Liability for IT Consultants?

The cost of coverage varies significantly depending on the unique needs of your business, from business size to the industry you work in. However, the average cost is somewhere around $25 to $40 per month for a small business in the IT sector. It can be significantly higher than this in some cases.

Here are 5 key factors that influence the cost of professional liability insurance:

The importance of the type of software designed.
Whether or not you perform tasks that could result in property damage if done improperly.
The difficulty of the tasks that you perform.
Whether or not working conditions increase the risk of spills or other forms of property damage.
How likely you are to make errors and omissions.

Keep in mind that you will also need to pay for indemnity insurance and general liability coverage. You can expect to pay around $50-$100 for professional indemnity insurance and around $25 a month for general liability coverage.

While the total cost of getting each of these policies separately is likely to be around $100-$150 a month, getting a plan that offers all three forms of coverage will reduce your expenses considerably. It may even be possible to obtain complete coverage for less than $100 a month.

We Offer the Best IT Consultants Professional Indemnity Insurance and Liability Coverage

If you are looking for business insurance as an IT consultant, we offer the best plans on the market. Not only do we offer exceptional coverage, but you'll be able to get our policies for a low price as well.

Furthermore, we always make it easy to talk to our CoverWallet consultants, making it easier to choose the right plan for your needs.

We offer plans that are designed with the unique needs of IT consultants in mind. Contact us for more information, and get a free quote today!