As an IT consultant, your clients likely rely on you to provide them with the best IT systems, software, and guidance for their company. If your services don’t provide the end results clients expect, you could be sued. In addition to these professional risks, your company could be held liable for risks common to most companies, such as property damage, cyberattacks, or an injury that occurs at your offices. Business insurance can help protect your firm from these and many other risks.

What insurance coverage do I need for my IT consulting company?

While there are many types of coverage for companies to consider, these insurance policies are particularly important for IT consultants to consider:

Professional Liability Insurance

As a provider of consulting services and professional advice, professional liability insurance is one of the most important coverages to obtain. IT systems are crucial to many modern companies, and businesses that hire IT consultants require them to provide appropriate recommendations and implement software that works as expected. Even if your work is typically error-free, there’s always a chance that a mistake could be made, and clients may suffer financial losses as a result. If that happens, they could sue you for damages. Even if your company has done nothing wrong, a client could sue simply because they perceive an error on your part. Professional liability insurance can protect your company from the risk of lawsuits brought on by dissatisfied clients alleging failures in services, advice, or professional work.

Example:

• A client hires your company to find and implement CRM software that is suitable for their business. The client expects the software to integrate seamlessly with their marketing automation and content management systems, but once the software is installed they discover that integration is not possible. The client sues, alleging that you were negligent in suggesting this software and they lost sales as a result.

Cyber Liability Insurance

As an IT consulting firm, your business depends on digital systems and networks that may be vulnerable to cyberattacks. No matter how secure you may think you are, cybercriminals are constantly finding new exploits and loopholes, so there’s always a risk that you may be hacked or your data may be held for ransom. If hackers are able to access confidential data through one of your systems, you could be held liable. The costs of recovering from a cyberattack are high, and news of data breaches or cyberattacks can damage your reputation as well. Cyber liability insurance can provide financial assistance to help your company stay in business in the event of cyberattacks, and insurers often provide resources to help you prevent incidents as well.

Example:

• A hacker breaches your company’s computer network, gaining access to confidential client data and deploying a virus that shuts down your systems. Your insurer will pay for the costs of hiring consultants to remove the virus and restore any data that was lost. It will also pay for the costs of any client lawsuits that may result from the data breach.

Commercial Property Insurance

Most IT companies operate out of office space they rent or own, and as an IT consulting firm, you likely rely on computers and other technology equipment that could be difficult or expensive to replace. If an unexpected disaster strikes, repairing or replacing your damaged property can be costly. Commercial property insurance will help your company recover if a catastrophe occurs. Commonly covered perils include fire, windstorm, hail, vandalism, and explosion.

Commercial property insurance covers the following:

• Buildings belonging to or leased by your company
• Contents of the building, including furniture, computer equipment, and artwork
• Property of others while it is under your care, custody, or control

Example:

• Your company’s fire sprinkler system malfunctions and leaks, destroying dozens of computers and monitors. Your commercial property insurance would pay for your computer equipment to be replaced.

General Liability Insurance

Nearly every company has some level of general liability risk, even if they work in industries that are not physically dangerous. If you consult with clients at their locations, host client meetings at your own offices, or receive deliveries, it’s a good idea to consider general liability insurance. There is always a chance of personal injury, accident, or property damage. General liability insurance covers these third-party bodily injury and property damage risks. It also includes a personal and advertising injury component, which covers risks including libel, slander, and copyright infringement.

Example:

• Bodily injury: While visiting your offices to discuss a project, one of your clients trips on some uneven pavement on your front steps and falls, fracturing her arm. Your general liability insurance would pay for medical costs and legal costs if the client sues.
• Property damage: While visiting a client’s offices to implement new software, one of your employees trips on a stairway and knocks over a valuable piece of art, destroying it. Your general liability insurance would pay for damages.
• Personal and advertising injury: An online ad for your company’s services uses imagery that looks very similar to another company’s designs. The company sues you for copyright infringement. Your insurer would pay for legal defense and any settlements.

Additional Coverage

• A business owner’s policy combines general liability, property, business income, and extra expense coverage into a single package. For small or midsize companies, this type of insurance could help you obtain a wide range of coverage. Premiums for a business owner’s policy are typically cheaper than the cost of buying each coverage separately.
• Business income insurance will reimburse you for lost income and operating expenses if your business is unable to operate due to a covered reason, such as fire, storm damage, or other property damage.
• Workers’ compensation insurance is legally required for companies with employees in most states. It covers the medical expenses and lost income of employees who are injured or fall ill while working. For companies in the technology space, repetitive strain injuries are commonly a cause of workers’ compensation claims.
• Employment practices liability insurance protects your company if current, past, or prospective employees sue you for alleged wrongful treatment such as discrimination or sexual harassment. It covers legal fees and any settlements or judgments against your company.
• Commercial auto insurance is necessary for any business that owns vehicles titled under the business’s name. It covers bodily injury and property damage if the driver of the vehicle is at fault in an accident, as well as the value of the vehicle itself if it’s damaged by a collision or another peril.

Pricing and Quotes

Pricing for business insurance will vary based on the type of insurance coverage and the risk profile of your business. Insurers consider factors such as:

• Business size
• Industry
• Location
• Number of employees
• Claims history

Businesses with higher risks will have higher premiums than those deemed lower risk. For example, an IT consulting firm with a history of frequent claims will face higher premiums. Premiums also rise as you increase the limits of insurance. Different insurance companies have different models for rating risks, so it is worth comparing pricing across different insurers.

In order to get an accurate estimate on pricing, it’s best to get a quote from a reputable insurance company. Below we’ve highlighted a few of our trusted partners who offer coverage for IT businesses:

Provider	General Liability	Professional Liability	Business Owner's Policy
Embroker	??	??	??
CoverageSmith	??	??	??
CoverWallet	??	??	??
Hiscox	??	??	??
Thimble	??	??	??

Final Word

Purchasing the right insurance coverage can protect your IT consulting company from a variety of major risks. Business insurance can help you deal with unexpected disasters, whether it’s a lawsuit brought by a dissatisfied client, a fire that damages your offices, or a client injury that happens on your property. With the right insurance coverage, you and your clients will feel confident in the knowledge that your company would be able to cope with any major incidents that arise.