UK Business Insurance Tips for IT Contractors and Freelancers
Experts recommend professional indemnity insurance for IT contractors and other freelancers, but do you really need it? In its simplest terms, professional indemnity (PI) insurance, also known as errors and omissions insurance, can protect you and your business if a client makes a claim against you for the work you’ve done or fail to do.
The policy can cover claims of negligence, punitive damages, claims arising from subcontracting, libel, slander, and your costs for defending a claim. PI insurance is advantageous to IT professionals as mistakes in this particular industry can be costly. Truly, the decision to purchase PI cover may be out of your hands as many clients may insist on it as part of their contract with your business.
Benefits of Professional Indemnity Insurance
Mistakes will inevitably occur, even if you’re a conscientious business owner. While it’s easy to fix some mistakes, others may require significant amounts of money and resources to satisfy the injured party. There are some scenarios where PI insurance may not be enough. However, having coverage can protect your finances and keep your business intact.
Cover for Damages
Having adequate PI coverage in place protects you from financial ruin if a client makes a claim against you. The policy pays the cost of damages to the client, subject to the limits of the policy. It means you won’t have to pay the cost out of pocket, which could lead to debt or bankruptcy, and ruin your business.
Your coverage limits determine your protection, so make sure to purchase adequate coverage. Take note of the policy’s wording to ensure the coverage fits your unique situation. For instance, the policy should pay for punitive damages if you need it.
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Pay for Legal Costs
The costs for defending a claim could be as much as the claim itself. PI insurance could cover the legal costs of defending the claim – not having this cost covered will place a heavy burden on your business and personal finances.You can compare the cost of coverage using sites such as Makeitcheaper.com – you’ll quickly realise that spending a little now could shield you from hefty costs later on.
Increase Your Competitiveness
Traditionally, PI insurance was an optional expense for many professionals. In today’s litigious environment, scores of professionals realize the benefits of coverage. Since agencies and end clients now stipulate PI insurance in their contracts with professionals, you can increase your competitiveness if you have a policy in place.
PI insurance is not compulsory like employers’ liability or automotive insurance. But since your clients will want to protect themselves if something goes wrong, you should place your business in a favorable position by purchasing sufficient coverage.
Peace of Mind
While PI insurance is designed with knowledge-based workers in mind, many other freelancers could benefit from coverage. It will give you peace of mind and confidence in your financial future if a client or a client’s competitor pursues legal action.
Guest Author :
Evie Greenwood is a partner in an IT consultancy business. She enjoys sharing her experiences in business online.
