5 Professional Liability Exposures Every Tech Business Has

For many IT professionals, Technology Liability Insurance (aka Professional Liability Insurance) is required by client contracts. It’s a standard part of doing business.

But this Professional Liability Insurance is more than that because it offers protection for five professional exposures that all IT professionals face:

  1. Client miscommunication.
  2. Shifting deadlines.
  3. Scope creep.
  4. Copyright infringement.
  5. Simple mistakes.

By covering your lawsuit costs when you’re sued over one of these issues, Professional Liability Insurance can help protect your business. Let’s take a closer look at each of these risks and how Professional Liability works.

Professional Liability Exposure 1: Client Communication

Sometimes a huge, expensive professional liability lawsuit can boil down to a simple miscommunication.

In the IT world, you face constant communication challenges. Often, your clients don’t have a technical background. But you do. This disparity can lead to communication problems.

Your client may have a hard time explaining exactly what they want from your IT services. And they might also have a hard time understanding why one solution can’t include the 15 different features they dreamed up. Managing client expectations and ensuring you’re on the same page helps reduce your professional liability risks.

Professional Liability Exposure 2: Shifting Deadlines

“I’ll get that to you tomorrow. Or next week. Week after next at the latest.”

Pushing back deadlines is not only unprofessional, it’s a professional liability.

A client could sue you if a delay causes their business to suffer a financial loss. For instance, if a client’s sales take a hit when its site isn’t up in time, you could be liable for their losses.

Remember that your clients may be schedule marketing, sales, and other initiatives around your technology. Delays here can lead to a cascade of problems, and ultimately, lawsuits.

Professional Liability Exposure 3: Scope Creep

What is scope creep? The scope of a project defines what is and isn’t included. Scope creep occurs when projects change from the initial specs. Often, a client will want you to do more than was initially agreed upon.

For instance, you’re in charge of setting up an SaaS sales solution for a client. But the client may turn to you halfway through the project and ask if you’re also overseeing the data migration.

Disagreements about what was supposed to be included in your work are one of your professional liability risks.

Professional Liability Exposure 4: Copyright Infringement

Copyright infringement can be a professional liability risk, particularly if the dispute is over code.

Fortunately, if another party accuses you of copying its code, Professional Liability Insurance may cover the lawsuit. If you want to make sure you’re covered for code copyright issues, ask your insurance agent about which Professional Liability Insurance policies include this protection.

Professional Liability Exposure 5: Simple Mistakes

Everyone who has worked as a developer knows that sometimes the smallest errors in your code can lead to big problems. Whether it’s a missing semicolon or a problem defining a variable, simple mistakes can cause huge headaches.

The lesson holds true for all areas of IT, not just development. The smallest things can lead to data security problems, latency issues, data loss, and other tech hiccups.

What Is Professional Liability Insurance?

Professional Liability Insurance is a small business insurance policy that protects IT business owners from the cost of lawsuits when a client alleges there is a mistake in their work.

This includes a wide range of coverage. Miscommunications, technical blunders, and code-related copyright infringement can all be covered under this policy.

Who Can Be Covered Under Professional Indemnity Insurance?

Professional Liability Insurance can offer coverage for tech businesses and independent contractors. Whether you run a one-person business from your home or you’re knocking down walls at an open-floor plan office in Silicon Valley, you can buy a policy that offers these protections.

To learn more, see our sample quotes for business and individual contractor Professional Liability Insurance policies.