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Do independent contractors need insurance?

Independent contractors in IT share the same risks as small tech companies, so they likely need many of the same insurance policies.

IT contractors need business insurance that matches their risks

IT contractors benefit from small business insurance because every business has risks. Maybe your business performs a niche IT service most people haven't heard of. You might specialize in wearable tech, software testing, white-hat hacking, point-of-sale systems, or another tech industry.

Don't worry. No matter what your IT specialty, TechInsurance agents have probably helped a tech business like yours find small business or contractor insurance to fit its needs.

Compare small business insurance quotes for your tech company

Common IT contractor risks

Business insurance policies protect you from unexpected lawsuit costs, attorney's 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. An IT consultant 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 have fallen on the floor and are in pieces. The client sues him over the damaged equipment. Fortunately, the IT consultant has general liability insurance. His insurance company hires a legal team, who negotiates with the client. They agree on a $5,000 settlement for the computers and other damages, which his insurance covers.

Professional oversight. A cybersecurity expert 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 the expert should have found the weakness in their security that the hackers exploited. The expert calls up her insurance company and files an errors and omissions insurance (E&O) claim. Had the hacking also resulted in a data breach, her cyber liability insurance could have covered those expenses.

Smoke and water damage. A software developer rents a small office in a commercial building full of other solopreneurs. There is a fire in one of the offices next to his, and the fire department gets it under control. But between the smoke, soot, and heavy-duty water damage, his office furniture, computer, and collection of autographed photos are destroyed. While the landlord's insurance will take care of physical damage to the building, the software developer needs his business owner's policy (BOP), which includes commercial property insurance, to replace his belongings.

Risk management for small IT businesses

Whether you're an independent contractor or a small business, the best strategy is to avoid a lawsuit in the first place. Along with the obvious benefits, avoiding claims can help keep your premiums low.

With a strong risk management plan, you can reduce office injuries, social media missteps, and other accidents that lead to claims. You can even mitigate the risks of a client E&O lawsuit.

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