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Part 5: Recommendations

The TIMI numbers offer a few important takeaways for owners of small IT businesses. Here’s a summary of the key points we hope you’ll take away from this report.
  • Contracts are king. Considering that most of the claims technology professionals face involve disputes with clients, we don’t think it’s possible to overstate the importance of using contracts. Sure, it may not make sense to drop $500 on a lawyer’s contract-review services for a project that nets you $2,000, but for larger projects, attorney supervision is an important investment. If you’re working primarily with small contracts, use a modifiable contract template like the ones available from TechInsurance or from a service like ContractEdge.com. Also remember that even small jobs can lead to big claims. To help protect yourself from the damage such claims can cause your business, include a limitation of liability clause in your contracts whenever possible.
  • Don’t be afraid to negotiate with clients. This could be classified as Recommendation 1.a, actually. When working with a bigger client, don’t assume you have to accept all the terms of their contract without question. Ask about terms that seem off to you – they may have been included in your contract inadvertently, especially if your client uses the same contract for technology companies and those that don’t provide tech services. Be willing to request terms other than those proposed – and if you aren’t able to negotiate, make sure you’re clear about what work is and is not expected of you.
  • Manage risk proactively. The old saying about an ounce of prevention being worth a pound of cure is as true as it ever was. Invest time in communicating clearly with clients, helping verify data security, and following copyright rules. These simple measures will help you avoid many of the most expensive disasters that can hurt your business.
  • Know the benefits – and limitations – of business insurance. Professional Liability Insurance is a powerful tool for small IT businesses, but it’s not all-powerful. First, the good: in addition to allowing you to comply with contract requirements, having a Professional Liability policy can help you win the confidence of potential clients by demonstrating your commitment to professionalism and distinguishing your business from competitors who don’t have active coverage. But, as we mentioned earlier, many Professional Liability policies exclude certain types of coverage, so be sure to verify with your agent what your policy includes. To secure effective coverage for your IT business, complete an online insurance application, and we’ll send your quotes right to your inbox.
70% of businesses raise prices or cut hiring when sued