Professional Indemnity and Liability Insurance for
IT Contractors
Provided in association with Coulson Pritchard Associates
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What do you need?
You are an IT/Computer Contractor. You are a professional
and well rewarded for your work. Working for yourself though carries certain
obligations and responsibilities - legal ones. Some important factors to consider:
- Mistakes can be costly. You carry a responsibility to your clients and
they have a recourse at law against you for financial loss. The chance of
a claim is small, but the chance of claim being large is high!
- An agency contract will not protect the computer contractor in most circumstances.
- Clients are increasingly asking to see proof of professional indemnity
insurance before awarding you their contract.
- Having Professional Indemnity Insurance supports your Independent status. It may help you argue against an IR35 ruling. Premiums are fully allowable against tax.
A complex and once expensive area of contractor finance, many contractors
are now looking at the various insurance policies which are available to protect
you in the event of an accident at work, or claims against you for errors,
ommissions or negligence.
IT contractors provide professional advice which is relied upon by others
(clients). This means if you make a mistake in your work you have a direct
financial responsibility to your client for the errors. Whilst you may consider
the possibility remote, it does happen. Increasingly, with the increase in
IR35 friendly contracts, many agent's clients are insisting on evidence of
professional indemnity insurance. Having this protection will prove to your
clients that you are professional in your approach and will help in obtaining
future work. Although mistakes are rare, these policies are now reasonably
priced and will also provide peace of mind.
Professional Indemnity
Provides financial protection for your company and is designed to meet the
cost of defending claims made against you, including damages that may become
payable. Claims can occur where a client suffers a financial loss as a result
of alleged mistakes or omissions on your part. You may even be sued by a client
who is merely dissatisfied, but has no valid claim, leading to substantial
legal costs and time away from contracts. Of course, such claims are rare.
Public Liability
This type of policy will protect you against your legal liability where you
accidentally cause damage or loss to someone else's property (Examples: Coffee
down the back of the computer or over the keyboard, knocking a laptop or other
piece of IT equipment off a desk etc). Also, if you accidentally cause injury
to someone whilst working at a clients premises (Examples: You have cables
running from various machines to a PC you are working on and someone does
not notice and trips over and injures themselves).
Employers Liability
This insurance is arranged to protect employers against claims for injury
or illness brought by employees. Employers' Liability (Compulsory Insurance)
Act 1998 requires that employers maintain cover to a minimum of £5,000,000
in respect of such claims. Many contractors don't take out this type of policy
(since they will be claiming against their own Limited Companies!) - but it
is a statutory requirement all the same.
Equipment Cover
You should be looking to cover the replacement costs (and subsequent disruption
compensation) of the loss of your business assets such as computers, faxes,
printers, books, desks, telephones, etc. Many liability policies allow for
this to be added cheaply and can be all arranged as 'all risks' (loss, accidental
damage and theft). Our insurer adds only £37 per annum to the Liability
Cover for £5000 equipment cover.
It is also useful in demonstrating to the authorities e.g. IR, that you are
professionally protecting your business viability going forward.
Legal Expenses
Computer Contractors are exposed to new regulations and legislation e.g. your
'status' ref IR35 and also a changing landscape in demand for contractors,
that means many fringe IT Agencies may in future go 'bump', owing contractors
many thousands of pounds! Up to now the fear of taking legal action to defend
or pursue your rights and the heavy costs involved are a deterrent. Failure
to do so can be equally, if not more costly and disastrous.
Our new Legal Expenses Policy is the answer. The Computer Contractors Legal
Expenses policy gives you the power, through its level of cover up to £50,000
of legal costs per claim, access to a 24-hour helpline and to professional
advice through a nationwide panel of specialist solicitors.
Legal Defence
Provides legal costs and expenses for defence and appeals in respect of civil
and criminal proceedings for both you and your employees.
Data Protection
Provides legal costs and expenses for representation and defence proceedings
brought under the Data Protection Act.
TAX, PAYE & VAT Protection
Provides legal costs, expenses and accountants fees to represent you in an
in-depth investigation by the Inland Revenue or Her Majesty's Custom and Excise.
Employment Disputes
Provides legal costs and expenses in defending civil or criminal proceedings
and appeals for companies with more than 1 employee.
Property, Licence Protection, Bodily Injury & Attendance Expenses
Also covered under the Policy. At only £75.00 per year can you afford
not to have it? Please see the PI online application form, where Legal Expenses
cover can be arranged on-line in minutes.
How much do these policies cost?
Policies of this type are far less expensive than you may think, although
the final cost will depend on your individual circumstances. The cost of individual
policies tend to depend on the following factors:
- The level of PI cover your company requires
- The annual turnover of a contractor's company
- The number of employees in the company
