The importance of Professional Indemnity insurance for IT Contractors

4th July 2019

Working as a freelance IT Contractor or Consultant can be a massive draw for a lot of workers from the information technology industry. IT can be an extremely lucrative sector for contractors to work in, and with the continual developments in digital technology it is a sector that continues to grow rather than slow down. The Information Technology sector is often open to misinterpretation and many people misunderstand the complex nature of an IT Contractor’s work.

One key things to remember when you work for yourself is that you do not have the same level of protection that you receive as a full-time employee. Therefore, it is important you carry comprehensive business insurance to protect you from the unexpected and ensure you thrive in your freelance career. One of the key policies recommended to IT Contractors is Professional Indemnity insurance (PI).


What is Professional Indemnity insurance?

IT Contractors often impart expert advice and design workflows and technology systems, it’s an integral part of their job, so they are particularly vulnerable to potential professional indemnity claims.

If you offer professional advice, services or designs that are deemed incorrect and your client suffers a financial loss as a result, they could make a claim against you.

PI insurance will cover the costs of your legal defence costs if a client takes legal action against you. For professionals offering advice and services in the UK, it is widely seen as an essential insurance policy to carry.


What does PI insurance cover?

It’s important to remember that PI will only cover you for making a mistake. If you are negligent in your work, or you promise something to a customer that you know you can’t deliver, professional indemnity insurance can cover you for mistakes including professional negligence, unintentional breaches of copyright or confidentiality, Data Protection Legislation prosecution defence costs and loss or damage of documents.


Do I need PI insurance?

Even though PI is not a legal requirement in the UK, it is highly recommended and in a lot of cases clients won’t even consider engaging you if you cannot prove you have the correct comprehensive insurance cover in place.

From that point-of-view Professional Indemnity insurance can be viewed as a sound business investment for freelancers and contractors alike.
It is important to remember that you could be liable for thousands of pounds if you offer advice or a service which leads to your client losing revenue or having to pay out to rectify a problem.

Professional Indemnity insurance is not prohibitively expensive, but your premium will depend on your occupation, the level of cover you require and the excess on the policy. Some covers start from as little as £7.00 a month.



For further information please speak to our partner, Caunce O’Hara, and their friendly (award-winning!) team on 0333 321 1403 or simply use this link to get your own personalised quote.

All content is accurate at the time of publication

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