Small businesses represent a growth opportunity for IT consultants. After all, entrepreneurs are usually talented in their field, but not necessarily knowledgeable – or interested – in the technology side of things. As an IT consultant and a small-business owner, you’re in a unique position to understand their needs.
But even small business clients may sue over accidents and work mistakes. Remember, their losses hit harder because they may not have much financial cushion. With that in mind, let's take a look at four insurance policies that can help you handle small business IT consulting problems.
1. Technology Errors and Omissions Insurance
One of the most important types of protection an IT professional can have is Errors and Omissions Insurance (E&O Insurance). This type of policy can offer financial help if you’re sued over the work and service you provide.
For example, an upset client might allege that your work cost them valuable business or that you failed to deliver a promised result. E&O Insurance can help pay for:
- An attorney to defend you.
- Your court costs.
- A settlement to get the case resolved.
- A judgment if the case goes to court and the judge rules against you.
Small-business owners rely on quality service for their livelihood. One mistake could easily hurt their business, and they may see suing you as the only way to offset their losses.
small-business owner and founder of the international shipping and moving company comparison site
(@MoverDB), offers an example. “In the past, I'd outsourced all my web hosting to a cheap shared company that could not handle the traffic when one of my articles went viral," he says. "This meant we missed out on far more business than we would have made using a better supplier.”
Denise Meng (@BillboardDiva) is another example. She's the
owner of outdoor marketing firm
Billboard Ads Atlanta
. “As a small business owner in a time-sensitive and deadline-driven business, I cannot afford NOT to hire out for my IT needs and services,” she says.
She expects her IT providers to be “available and responsive when situations arise.” She notes, “I cannot afford for my systems to be down or impaired in any way. The loss of productive time is unacceptable to any business owner.”
Why you should consider this policy: Because small-business owners can’t afford mistakes or errors on your part and may sue to recoup their losses.
2. Third-Party Cyber Liability Insurance
The threat of data breaches grows every day, and small businesses aren't immune. In fact, cyber criminals often prefer to target small businesses because they tend to have less security.
If you provide cyber security services for a small-business client, you could be blamed if something goes wrong and your client experiences a data breach. They may demand that you cover their losses and the expense of notifying any affected customers.
Third-party Cyber Liability Insurance can help you cover these costs, allowing you to patch up the data breach aftermath for a client and keep your own business savings intact.
Why you should consider this policy: Because small businesses are vulnerable to cyber crime and you can be held responsible if your services don't prevent a data breach.
3. General Liability Insurance
General Liability Insurance can cover third-party bodily injuries and property damage, which comes in handy when you work at a client’s office or store. If you accidentally injure a client while working – the business owner trips over your laptop bag, for instance – your General Liability Insurance can cover their medical expenses or subsequent lawsuit costs (if it comes to that).
If you accidentally damage a client’s property – say, their computer – General Liability Insurance can help you pay for repair or replacement costs.
Why you should consider this policy: Because you can be liable for accidentally injuring a client or damaging a client’s property.
4. Workers’ Compensation Insurance
Many consultants work alone, but if you have employees, you may need Workers’ Compensation Insurance. This policy can help pay for worker medical expenses when they're injured on the job. While some states require every employer to have Workers’ Comp, others allow exemptions for small businesses.
Why you should consider this policy: Because you may be required by state law to have it for your employees.