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Professional Indemnity Insurance for an IT Contractor

Business Insurance Liability Insurance Professional Indemnity Insurance Contractor Insurance Technology Sector Insurance IT Consultants Insurance IT Services Insurance

When working as an IT contractor, having the right insurance to cover your business is a must. However, as a service provider offering advice as your product, the information on what type of insurance to get can seem complicated. Especially professional indemnity insurance is something that people may find confusing. In this article, we’ll go over how IT contractor professional indemnity insurance works.

What is professional indemnity insurance?

As is the case with any business, offering professional services comes with its own risks. Professional indemnity (PI) insurance protects your business in case a client raises claims of professional misconduct, such as faulty advice.

Professional indemnity is ideal for businesses that provide a service where inaccurate or inadequate advice could result in personal damage or financial loss. In the case of an IT contractor, PI covers the IT consultant whose advice or design the customers rely on.

Professional indemnity insurance covers your business and employees in case of…

Breach of professional duty – an act, error or omission that lead to negligence
Dishonesty or fraud by your staff
Losing client documentation
Third-party defamation, libel or slander
Legal liability for damages and claimants’ costs or expenses arising from the act, error or omission of the “Company’s” employees
Inaccurate or inadequate advice provided to a client
Acting without proper client instructions, failure to comply with the client’s instructions
Breaches of statute
Breaches of the Trade Practices Act

How is it different from public liability and products liability insurance?

Most business owners are familiar with products liability and public liability (PL) insurances. Products liability and public liability insurance are available to most professionals.

These two mainly offer coverage for property damage or personal injury that may occur during a service provider’s activities. To put it simply, they focus on the physical outcomes of faulty services.

IT Contractor Professional Indemnity Insurance – how does it work?

So, how does IT contractor professional indemnity insurance work? IT consultants are typically contracted by a third party to provide a range of services. This could include maintenance and repair, IT systems analysis, database programming and applications, as well as many other activities.

The difficulty with IT contractors is this range of services they may or may not offer. For example, if providing software design, the work could be seen as both a product and a service. On one hand, if the work is treated as a service, it’s covered under PI insurance. On the other hand, if it’s treated as a product, it would be covered under public or products liability.

Management Liability Insurance

Management Liability insurance is designed to provide protection to both the business and its directors or officers for claims of wrongful acts in the management of the business.

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Business Insurance

A business insurance pack can provide cover for your business premises and contents, against loss, damage, theft or financial loss from an insured interruption to the business.

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Business Package

Purchase up to six products under one Business Insurance Package.

Details Get a quote!

Due to this variety of work and how it can be perceived, IT contractors will often need both professional indemnity and public liability insurance.

Do I need professional indemnity insurance as an IT contractor?

To make it simple – if you offer advice to clients against a fee on a service-basis, you may need professional indemnity insurance. However, as is always the case with insurance, the ideal solution will depend on your individual circumstances.

Norton & Co can help you sort out the best professional indemnity insurance arrangement for you. Speak with us today to find out more.

General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

All information above has been provided by the author.

Scott Norton, Norton & Co Insurance, ABN 11628176787, AFSL 239049