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Business Insurance For IT Technology Professionals

Business Insurance for Information Technology Professionals

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As an IT professional or owner of an IT business, your clients count on you to build, operate and maintain the technology systems that power their businesses. While you strive to provide the best service possible, occasionally things don’t go according to plan. Clients may be unsatisfied with your work and can sue you, regardless of whether your company is at fault or not. Additionally, your IT business is exposed to similar risks as most other kinds of businesses, such as accidents or natural disasters. Having the right insurance coverage can help protect your business from the financial repercussions of a variety of unexpected incidents.

Types of Insurance for IT Professionals

Professional liability insurance (also known as errors and omissions insurance) is designed to protect your IT practice in cases of alleged negligence. Because IT work can be quite complex, and because the technology space is constantly evolving, clients might file suit against you for many reasons including:

If any of the events listed above causes a client to sue you or your business, professional liability insurance will cover the associated legal costs required for your defense, as well as any judgments or settlements against your company.

There are several important considerations to keep in mind when shopping for your professional liability plan. Clients may sue you or your business even when you haven’t done anything wrong, simply because they misunderstand the nature of your work.

Also, different insurers offer different coverage options. Therefore, it’s important for you to carefully review what each provider offers, and weigh your options against one another.

Professional liability insurance provides coverage for your employees as individuals, as well as your company as a whole.

Example:

General liability insurance provides coverage for your IT business in cases where somebody experiences bodily injury or property damage while you’re conducting business. General liability isn’t specific to the IT field—it is generally useful for any type of business.

For instance, any IT operation is subject to premises liability—when an injury occurs on a work site. Regardless of whether you operate as an individual or as the owner of a larger business, you may be subject to claims holding you responsible in these instances.

Example:

Commercial property insurance helps protect your business if your work space is burglarized, or hit by a major weather event or a fire. This form of insurance will provide for the repair or replacement of your physical assets in the event of fire, windstorm, theft, vandalism and more.

For IT professionals, commercial property insurance can provide protection for your servers, computers, tools, electronic equipment, or other valuable property owned by your business.

A business owner’s policy combines commercial property coverage and general liability coverage into a single plan, providing premium savings to qualified small businesses.

Workers’ compensation insurance is legally required of IT businesses in most U.S. states if you hire employees. It provides financial benefits to employees of a business in cases of work-related injury or illness. Workers’ comp policies cover any medical costs associated with rehabilitation, and provide for a portion of employees’ lost wages while they’re unable to work.

Example:

Additional Insurance Coverage

On top of professional liability, general liability and commercial property, a suite of other options exist for IT insurance. These options may be more or less relevant depending on the nature of your business.

Insurance Coverage for Your Employees

If you’re an owner or manager of an IT business, you may want to consider group insurance plans for your employees. These insurance plans are an integral part of a comprehensive employee benefits package that can help you recruit and retain talented employees.

Group health insurance helps employees cover their medical costs. Health insurance coverage ranges from hospitalizations to simple primary care checkups. Employee health insurance helps keep your employees healthy, productive and happy.

Group life insurance provides financial compensation to near relatives in the event of an employee’s passing (work-related or not). Group life insurance tends to be cheaper, per person, than individual life insurance policies.

Group disability insurance provides income to employees who cannot work due to a non-work-related injury or illness.

What IT businesses need insurance?

It is advisable for every IT business to own insurance policies. Insurance not only protects against unexpected lawsuits and claims against your business, but it also demonstrates to clients that your business is reputable. If any of the following applies to your business, you may want to have business insurance:

In addition, in some cases client agreements will require IT contractors to have insurance that will cover their work. It’s also important to remember that clients can be unpredictable.

You may not be able to account for all potential problems that clients may have with you or your work. If work is not completed to your clients’ satisfaction, you may find yourself the recipient of a lawsuit, regardless of whether or not your business is at fault.

Certain insurance policies are also required by law of IT businesses. Workers’ comp and auto insurance are examples of insurance that IT businesses may be required to carry if they hire employees or own business vehicles.

IT Insurance can cover professionals in a wide variety of occupations. Some common occupations that need Information Technology Business Insurance include:

Choosing an Insurance Company

The first step in acquiring insurance for your IT business is finding the right insurance company to partner with. Below, we’ve highlighted a few of our trusted insurance partners, who offer a variety of coverage suitable for technology businesses. We’ve also included a few factors that are important for your business to consider when evaluating insurers.

ProviderGeneral LiabilityProfessional LiabilityBusiness Owner's Policy
Embroker??????
CoverageSmith??????
CoverWallet??????
Hiscox??????
Thimble??????

The financial strength of the insurer: Claims are paid out from the financial reserves of the insurance company you choose, so it’s important to select an insurer in a strong financial condition.

It is quite rare that an insurance company should experience the sort of financial trouble you’d have to worry about, but it’s not entirely unheard of. For this reason, it’s safest to buy from a reputable, large company with deep pockets.

The next question would be: how do I tell if an insurance company is stable? Ratings agencies offer grades to companies, based on their financial strength. The most reputable of these agencies are Standard & Poor’s, Fitch, AM Best and Moody’s.

Choosing the right price: The best way to determine which policy makes most financial sense to you is to weigh all your options from multiple providers. Brokers and online quotes will help you get a sense for the market, so you can find the best deal.

Naturally, the cost of a policy will vary with the size of your company and the nature of the IT work your company does.

Choose an insurer with a reputation for strong customer service: While finding the best deal might be your first priority, customer service is going to be the thing you live with for the length of your policy. The last thing you’ll want is a provider with poor customer service in the event you have to file a claim. Call up a few providers before deciding on one—it’s a good way to test out their service.

Final Word

Running an IT business is a challenging task, and the hard work and sweat you put in could be wiped out in an instant in the face of an unfortunate incident or lawsuit. With the right business insurance coverage, you can make sure that your company is protected, along with your investors, employees, and clients. The investment you make now in business insurance coverage can mean a world of difference if your company ever faces unexpected liabilities or risks.

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