The details matter when it comes to IT consulting. When you are suggesting IT solutions to a client, there needs to be a proper fit that is based off the size of their business, their industry, and their budget. This is true for the type of business insurance you get too; the details here also matter. The insurance policy you get needs to be designed to fit the needs of your IT consulting firm.
Risks of IT Consultants
As with any consultancy business, there are risks associated with the work that you as an IT consultant does. Here are a few of the most common:
Faulty Backup
While backing up a client’s business records, you lose all their data because the external hard drive you were using failed. Your client files a claim against you for failure of delivering the services you promised because you used faulty backup procedures. For this type of claim, you would be protected under professional liability insurance (also known in this case as errors and omissions insurance).
Dissatisfied Client
Here’s an example: A client hires you to check out their website and network security to find weaknesses and implement new procedures. Later down the road after you have completed the project, their site gets hacked and they lose revenue. They file a claim accusing you of faulty work. For this type of claim, professional liability business insurance would protect you.
Bodily Injury
In your position as an IT consultant, often you have to set up equipment. This can pose a risk for bodily injury or property damage if you caused a fire because your configuration overloads an electrical supply. Injury due to electrocution/electricity is also possible. In this situation, general liability would protect you against any claims for bodily injuries and related medical costs or property damage.
Equipment Damage
If you don’t have the right equipment, you can’t produce website designs or custom software. You can combine general liability coverage with added equipment damage coverage to cover things like external hard drives, servers, network cables, computers and others that are used for your services.
Types of Business Insurance Policies for IT Consultants
For these risks and others, it is important to be protected with the appropriate IT consultant’s insurance policies.
General Liability
This insurance protects you and your business from lawsuits brought on by customers, clients, non-employees and vendors. Some of the types of lawsuits it covers include:
- Property Damage
- Libel, Slander, Defamation
- Copyright Infringement
- Personal Injury
Errors & Omissions
Clients want to know that if you deliver unsatisfactory results or make mistakes all damages will be paid by your insurance company. Below are some types of client disputes that can result in an errors & omissions lawsuit:
- Project cost miscalculation or overestimating the simplicity of a solution
- Bringing on delays due to miscommunicating project specifications
- Installing software that isn’t integrating with the other software on a client’s network
- Giving recommendations of contractors or vendors whose work is poor
- Installing software that results in a data breach
Business Owners Policy
The BOP insurance is a combination of property insurance and general liability bundled into a single policy. It is specifically designed for small businesses. It offers the same protection as a separate general liability or property insurance policy.
In addition to these types of insurance, you should also look into equipment breakdown insurance and business interruption insurance. It is always a good idea to have full protection working as an IT consultant. You never know when something will happen to equipment or if an injury will lead to a lawsuit. You can speak with an independent insurance agent to receive a free quote and get your IT consultant business insurance policy set up.
