Professional indemnity insurance is deemed a necessity in today’s hyper litigious society. This is all the more relevant for IT contractors, whose very livelihood could be in jeopardy because a dissatisfied client decides to take legal recourse due to a supposed error or bad judgement.

From a recent survey, it is understood that nearly 40% of UK IT companies don't have Professional Indemnity cover. Without professional indemnity insurance these companies are exposing themselves to uncessary risk. Just one piece of bad advice, once piece of bad code, could sink a business forever as negligence claims in the IT sector often run into hundreds of thousands of pounds. 

Whilst the highest frequency of PI claims are attributable to larger companies, they are now broadening out to  smaller IT companies, consultancies and contractors as well. It's these small, one man band IT companies that are most exposed as the majority will not possess the necessary financial or human resources to defend themselves.

How does professional indemnity insurance protect IT Contractors?

Professional Indemnity Insurance provides peace of mind to IT contractors. Having cover takes the worry out of dealing with clients enabling the contractor to focus on completing projects to a high standard.  

If a mistake is made, a policy will settle the legal costs of defending claims and meeting any liability payments that may arise out of negligent actions or serice provided by the IT Contractor to the client. Cover includes professional negligence, breach of intellectual property, loss of data or documents, libel or slander,  breach of confidentiality and director or employee dishonesty.

Its important that IT Contractors assess risks on a project by project basis and ensure they have adequate protection. For example, a project manager over-seeing the implementation of a multi million pound ERM system should consider having higher indemnity limits than a website support consultant-because there is more likelihood that things could go wrong and any resulting claim would be substantial. The best advice is to purchase as much professional indemnity insurance as one can reasonably afford and avoid being under-insured. 

Professional Indemnity Can Help Win Contracts

Most clients, especially UK government departments and large PLC's now insist on appropriate Professional Indemnity Insurance in place for before contracts are awarded. So why delay purchasing cover when it can shield your business from risks and increase your bottom line. There are fewer better investments around.