Do IT consultants need business insurance?
If you’re an IT consultant, you’re constantly advising your clients on how to use technology in a way that will most benefit their business. They rely on your expert guidance to meet goals and overcome various obstacles.
While your tasks may vary by client and by project, there’s always a constant: responsibility. As the expert providing advice, you’re responsible for the outcome, whether it’s good or bad. If it’s good, that’s great! But if something goes awry, your client will likely blame you.
Providing professional services always comes with risk, but tech can be especially tricky. That’s because there are so many tiny details. Whether you implement new systems for clients, install software, or handle client information, we always recommend insurance for IT consultants.
What types of insurance coverages are best for IT consultants?
If you’re offering expert advice or services, definitely consider professional liability insurance. And because you’re in tech, cyber liability is also very important. Several coverages pair well with consultants, but let’s start with these two major coverages first.
Professional liability insurance for IT consultants
Professional liability insurance, also known as errors and omissions, provides protection in the event that a client claims you made a mistake, were negligent, or failed to deliver goods or services. Even if a poor outcome isn’t your fault, you could be held liable. And with that comes lawsuits.
Professional liability covers the following:
- Negligent services: Your client thinks your work doesn’t meet professional standards.
- Failure to deliver promised services: You somehow miss an important deadline that causes your client a loss.
- Professional errors: You gave a poor recommendation which resulted in financial loss for your client.
- The costs associated with going to court should a client sue you.
What is cyber liability insurance?
Cyber liability insurance protects you and your clients in the event of a cyber threat. It’s very important for anyone who works in the IT consulting industry.
You may think that hackers only go after large organizations. However, hackers often attack smaller organizations because they assume they don’t have robust security systems, unlike many large companies.
It doesn’t matter if you’re a huge company or a business made of you, yourself, and you. If you’re dealing with customer data (even something as simple as credit card information), you should have this type of insurance.
Cyber liability helps protects your reputation, your customers’ privacy, and of course, your assets.
Here are the coverage highlights:
- Forensics investigation: Resources to help figure out what happened and how to fix it.
- Customer notification: Mailing alerts to customers, which can be very costly.
- Credit monitoring: You’ll need to keep an eye on customers’ whose info may have been compromised.
- Identity theft.
- Reputation management.
- Cyber extortion.
- Third-party services and equipment for business interruption.
- Legal fees, consulting fees, administrative fees, and so on.
What are other recommended coverages for IT consultants?
- General liability: This is a basic coverage that every consultant should consider. It covers many of the random things that could go wrong when you run a business, from property damage to bodily injury to libel and slander.
- Business property: Work gear is expensive. And if your gear gets damaged, replacing it out of pocket can be painful. Business property insurance protects commercial property from fire, theft, natural disasters, and vandalism. Note: If you keep your work gear at home and think you’re covered because you’ve got homeowners insurance, you’re not that covered. Homeowners policies typically only cover up to $500 in commercial property damages.
- Inland marine: You might consider inland marine insurance if you work at coffee shops, because business property coverage ends when you’re not at your office (more than 500 feet away).
- Business auto: This policy covers vehicles owned by your company.
Want more coverage for less?
Many consultants qualify for a business owner’s policy, or BOP. It combines both business property and general liability insurance into a nice little bundle of a deal. The great thing about a BOP is that you get several coverages in one policy, and it’s cheaper than purchasing the coverages on their own.
You can also sometimes get extra coverage options and protection with a BOP.