Why do IT contractors need insurance?
A system failure
When a customer’s system goes down as a result of untested patches in an operating system’s update, you’re the first point of contact to find a resolution, but you might also be blamed for the glitch. Even though you act quickly to get your client back online, they decide to make a claim for revenue lost in the downtime, arguing you should have used simulations in case of software failure. Sometimes a genuine mistake or miscommunication can result in legal action for an IT contractor – professional indemnity insurance can help with defence and settlement.
A client injury
You’ve secured a consultancy contract with a new green energy company to develop their data systems and head up training for employees. The learning session is booked, so you set up your presentation and invite attendees into the meeting room. Unfortunately, your laptop charger cable is trailing on the floor, causing someone to trip and hit their head. Public liability insurance can provide welcome backup for legal expenses and compensation if the injured party decides to make a claim against you.
A major data breach
While working on an exciting contract to optimise the network management of a clothing brand, the system is compromised by hackers. Before you can stop the breach, cybercriminals steal sensitive data from the software you’re using. For an IT contractor, insurance needs to cover the cost of retrieving data, performing repairs and defending against claims for compensation. Cyber and data cover with Hiscox can assist with recovery from attacks, restoring systems and recreating data.
What cover is available for insurance for IT contractors?
Professional indemnity insurance
An IT contractor may need protection for professional indemnity risks, such as consultancy work, so this insurance can be considered key cover. Whether you’re offering professional skills or expert advice, you may need to defend yourself against legal action if a client believes you’ve made a mistake. PI insurance can help with the cost of defending and settling claims when a business you work with says your error has lost them money or damaged their reputation.
Cyber and data insurance
Cybercrime is a sophisticated and evolving threat – one you regularly advise your clients on within your IT consultancy firm. You understand the important role cyber and data insurance can play in protecting both you as an IT consultant and the businesses you work with. You may need to recover from an incident where data was lost, or deal with the aftermath of an attack. A cyber and data policy can help you cover the cost of getting back online.
Personal accident insurance
As a one-person operation, your business relies on you being fit and well to work. Whether an accident occurs in the context of your job, or while you’re playing in a charity football match, an injury could put you out of action and lead to lost earnings. Protect your sole trader business with personal accident insurance and you can recover with the help of financial support until you can return to fulfil your next IT contract.
An IT contractor might add other insurance types, such as public liability insurance, to their policy. Employers’ liability cover can be essential (external link) when employing staff, while you could also include portable equipment cover, equipment breakdown insurance and legal protection.
If you’re not sure what you need, tell us a little more about your IT consultancy business. We’ll help you to build your quote and explore any other insurance needs.
Build my coverInsurance for IT contractors and consultants: FAQs
What does professional indemnity insurance for IT consultants and contractors cover?
Professional indemnity (PI) insurance can cover several key scenarios for IT contractors and consultants.
Both roles can benefit from PI cover, as a client might say your consultancy was poor or that you made a mistake. You could even face a negligence claim if they say your mistake or advice cost them money.
A company might claim you breached confidence by disclosing private information during database admin work. Alternatively, someone may file a defamation case, citing a false statement about the contracted work which damaged their reputation.
You may also require cover if documents become lost or stolen. PI insurance provides cover for an IT contractor in all these circumstances.
How much does IT contractor insurance cost?
Business insurance with Hiscox starts from £10* a month, but the cost of your IT contractor policy will depend on the products you choose and the cover limits you set.
We work with you to tailor a policy relevant to your business. An IT contractor will have frequent access to databases and networks, so may feel more comfortable having a higher limit of cyber and data insurance, for example.
Our FAQ page can help you discover what you need to consider when working out how much business insurance costs.
*Figures based on policies from at least 10% of our customers.
Do you provide proof of cover?
Yes, at Hiscox we understand that contract and consultancy work often comes with the condition of requiring proof of cover. That’s why we swiftly send your policy documents to you after purchase to the email address you provide – you’ll also be covered immediately.
Before a client signs on the dotted line to employ the services of a trader in your line of work, they may stipulate they require you to have certain types of cover.
For instance, an IT contractor will likely be asked for proof of professional indemnity insurance.
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