Do IT Consultants Need Professional Liability Insurance?

As an IT consultant, you are responsible for a myriad of things from helping your client choose the right equipment and software to setting up and securing digital systems. But are you responsible if something goes awry with those implementations and the day-to-day management of clients’ digital needs? That’s where IT consultant professional liability insurance comes in. 

In most cases you are, in fact, responsible. IT consultants could be liable for not only system failures or breaches, but simply for not meeting expectations. That’s right, your client has the right to sue even if you previously reviewed a scope of work document and they signed a contract regarding deliverables. And while they might not win the case, you’ll still lose time and money defending your business. 

In this type of high stakes environment, it’s important to have security. And the best form of assurance for IT consultants comes in a variety of insurance policies. You’ll want to not only obtain professional liability coverage for things like legal fees from dissatisfied clients, but also general liability coverage for risks like theft of equipment and possible injury during installation of systems. But that’s not all there is to know. Let’s take a deeper look into the type of professional liability insurance IT consultants need and why.

The Benefits of IT Consultant Professional Liability Insurance

The basic facts are simple: any consultant who operates as a sole proprietor may be personally responsible for damages if they do not carry professional liability insurance. 

For example, a hair stylist could be sued for a dye job gone bad. Add in all of the sensitive and somewhat volatile nuances of IT consulting, and you can really see how important this kind of coverage is to individuals providing these types of services. That isn’t to say that the repercussions of a bad dye job aren’t important. We know how hard you work, hair stylists.

However, if you’re managing and monitoring all aspects of IT security, including firewalls and anti-virus protection, just imagine what could go wrong. The mistakes made here won’t just grow out in a few months. The damages could be devastating to your client’s business–and in turn damaging to your IT consultant career too. 

Is Professional Liability Insurance the Same as Errors & Omissions Insurance?

Professional liability insurance, can also be referred to as Errors and Omissions insurance. These policies can protect IT consultants in the event they make a mistake or forget something when they offer their services to a client. If you make an error and/or an omission, it could result in a lawsuit and this type of coverage could provide protection. Some clients may even require proof of coverage before agreeing to do business with you. 

That being said, there are instances where the insurance won’t cover your legal fees. Intentionally misleading a client is not something that will be covered. So you’ll want to be sure to keep a record of agreements along the way, so that you can prove your intentions were good, even if things don’t end up as you expected. 

For a more detailed explanation, check out this article on the difference between these two policies.

Where & How to Get IT Consultant Professional Liability Insurance

Embroker’s policies protect against claims of errors and omissions in your work and they even protect your personal assets from lawsuits against your consulting business. At Embroker, you can get custom coverage that will make for the most comprehensive policy you can find for an IT consultant. We know that the regular duties that come along with the job of consulting may lead to problems when working with clients who take issue with certain IT approaches or results. Embroker can help protect your business so that worry won’t get in the way of doing your work. 

The cost of professional liability insurance depends on a number of factors, including your industry, coverage limits, the size of your consulting firm and any prior lawsuits. At a baseline, IT consultants should get professional and general liability insurance, but do you need additional coverage? 

Other Important Insurance Coverages for IT Consultants 

General liability insurance will protect your consulting business against third-party injuries (physical and personal), accidents and property damage. And professional liability will protect you in circumstances where alleged errors and omissions may be made on your behalf. As an IT consultant, you’ll also want to consider obtaining some these other kinds of insurance policies: 

Commercial Property Insurance: This type of insurance plan will cover damage to your company’s property and on-site physical assets. You could also obtain a business owner’s policy which would include a combination of coverage types, typically a combo of general liability and commercial property insurance. 
Commercial Auto Insurance: Similar to personal auto insurance, this policy would cover vehicles used for business purposes. This kind of insurance could come in handy if equipment becomes damaged before you even get to the client’s location.
Workers’ Compensation: If you run your own IT consulting firm and have multiple employees, you’ll also want to get Workers’ Compensation insurance to cover care and compensation of individuals on your staff if they get injured on the job. 
Cyber Liability Insurance: Last but least, you should consider obtaining cyber liability insurance. If sensitive client data such as financial records or customer information is stolen, lost, or damaged due to hacking or other cyber incidents, your clients could sue you for damages and this kind of policy could protect your business. 

Remember, when working in IT as a consultant you are vulnerable to costly backlash. There may be things that happen that are beyond your control, no matter how many safeguards you put in place. The right insurance policies are key to your success. So take the time to understand the differences between policies and create a custom coverage package that will work for you. 

Embroker’s team of insurance professionals is here to help. We know that finding the right plan isn’t always easy when navigating the options on your own. We work with you from start to finish.

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