The need for IT Contractors professional indemnity insurance is becoming more and more important as time goes on. Information technology is a fast moving and ever changing industry. As an IT contractor it is likely that the work your carry out will fall in to one of the following categories, all of which are open to risk:
- Packaged Hardware / Software Provision
- Development of Bespoke Solutions
- Consultancy / Project Management
- Outsourcing
- IT Recruitment
- Internet Services
The following is a list of trades that would be suitable for cover under a technology and media Professional Indemnity policy wording. The list is not exhaustive but this will cover most areas of expertise in the field :
When professional indemnity underwriters look at an IT risk there are a number of factors that they will take in to consideration before providing a quotation:
Size of the firm – This is mainly established in two ways, the number of directors and staff and the gross annual income of the firm.
Qualifications and experience – Underwriters will look for a mix of qualifications and experience and a CV of the directors or principals will often help underwriters when they assess the risk.
Potential for loss – Underwriters will want to try and understand what would be the immediate financial loss, and other consequences, if data is incorrect, a system fails or becomes unavailable for any period of time. Experience has shown that the majority of the litigation against IT Companies occurs because of;
- Failure of the software / system to do the job which it was intended for.
- Failure to deliver the system on time.
- Failure to deliver the system to budget
As a result of this a client may either :
- Withhold some of the fees due or claims the return of the purchase price.
- Claim for a direct financial loss arising from negligence of the IT Company and perhaps even for consequential losses also.
