Common IT Contractor Risks
Business insurance policies protect you from unexpected lawsuit costs, lawyers' fees, workplace accidents, and property damage. The type of risks you face and the type of insurance you may need depend on the IT work you do, the clients you work with, and the number of employees you have.
Let's look at a few examples of risks you may encounter and the IT contractor insurance policies that can help:
- Destroyed client computer. A software testing freelancer is working onsite at a client's office performing some usability tests. He bumps into the corner of a desk and hears a crash. A monitor and tower fell and are lying in pieces. The client sues him over the damaged computers. Fortunately, the software tester has General Liability Insurance. His insurance company hires a legal team, who is negotiates with the client and they agree on a $5,000 settlement. His insurance pays for the computers and other damages as part of a settlement agreement.
- Professional oversight. A white-hat hacker performs a security analysis for a client. She points out some major security weaknesses and advises her client on how to fix them. Months later, the client's program is hacked, and they sue, claiming she should have found the one additional weakness in their security that the malicious hackers exploited. She calls up her insurance company and files an Errors & Omissions Insurance claim. Had the hacking also resulted in a data breach, her Cyber Liability Insurance could have covered those expenses.
- Smoke and water damage. A web consultant rents a small office in an office building downtown full of other solopreneurs. There is a fire in one of the offices next to his, and the fire department knocks it down quickly. But between the smoke, soot, and heavy-duty water damage, his office furniture, computer, and autographed photo of the cast of "The Walking Dead" are destroyed. While the landlord's insurance will take care of physical damage to the building, the consultant needs his Business Owner's Policy (BOP), which includes Business Property Insurance, to replace his stuff.
Risk Management for IT Small Businesses: How to Avoid Lawsuits
A key part of IT risk management is preventing lawsuits in the first place. To help you manage these risks, TechInsurance offers a variety of free resources, including an IT risk management blog, a glossary that explains insurance terminology, and sample insurance quotes. Start exploring!