When you’re a technology professional shopping for business insurance, it’s easy to get overwhelmed by the large number of available options. How do you determine what kinds of coverage you really need?
Start by thinking about the types of risks inherent in your IT company’s work. Does your job sometimes require physical labor, or do you employ others who could get hurt on the job? What would happen if you were to make a mistake in the job? Could it cost your customer time or money? Do you or your employees handle costly equipment that belongs to the customer? What would happen if your customer’s property were broken or stolen while in your possession?
With these thoughts in mind, look for technology insurance that protects your IT company against the most likely and/or costly of these risks.
Bodily Injury and Property Coverage
For example, systems integrators doing physical labor, such as pulling wire or moving heavy equipment, are at risk for injury on the job as well as for injuring other people or property at the client’s location where they’re working.
A general liability policy could cover damage to the client’s premises or injuries caused by you or your employees at a client’s site. But if you have employees doing systems integration work, it may be wise to also have workers’ comp coverage, which would pay medical bills and some compensation if they should get hurt on the job.
If your IT company brings your client’s computers back to your offices for configuration or repair, you’re also at financial risk if they should be damaged or stolen. A good business property insurance policy will cover loss of or damage to your client’s equipment that is in your care, custody, or control, as well as your own computers, media, furnishings, equipment, and other business property. You can easily obtain property coverage in combination with general liability insurance in an affordable package called a BOP, or business owners’ policy.
If you’re a web developer or programmer, you may be at less risk for physical injury, but working with critical business systems places you at high risk for professional liability. This means that your client could claim that you made a mistake on the job that resulted in a financial loss, and could come after you legally for compensation. Because IT systems are so critical to many businesses’ operations, these types of losses can be enormous.
For a programmer, it could start with a coding error that takes down a payroll application and results in significant expense for the client. For a web developer, it could be a malfunctioning e-commerce platform that shuts down an online retailer’s sales for a period of time.
In fact, any business in which you or your employees make professional judgments or recommendations is at risk for a client making a claim of professional negligence. Professional liability insurance for IT companies, also known as errors and omissions or technology E&O insurance, protects your business against such claims, paying for a legal defense as well as any awarded settlements, up to policy limits.
If you’re running an IT staffing company, your biggest risk is that someone you place on the job will make a costly mistake. When you place an IT contractor into a job with one of your clients, his or her performance doesn’t just reflect upon your reputation. You can actually be held legally accountable for that contractor’s actions.
In short, the risks for IT staffing companies are the same as those of the independent IT contractors they place. In addition, these firms are exposed to the same risks that any employment agency has. To protect themselves, IT staffing companies often carry their own IT business insurance and require the contractors they place to carry their own. At a minimum, technology E&O insurance, property coverage, and general liability insurance may be smart investments for all parties involved in an IT staffing arrangement.
Of course, there are many other professional insurance options to consider as well. If you need help evaluating your IT company’s insurance risks and determining what kinds of insurance you may need, contact the technology insurance specialists at www.techinsurance.com by calling (800) 668-7020 or sending an e-mail to [email protected]
Writtten by Brenna Lemieux - check her out at Google+ or Twitter