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Do I need contractor professional indemnity insurance cover?

Published on Sep 21, 2009 |

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A significant number of IT contractors take out professional indemnity insurance policies to cover themselves in the event that a past or present client sues them for negligence or a breach of duty while on a contract job.

PI insurance also covers you if you are sued for the unintentional infringement of copyrights and trademarks, for loss of data or documents, and other similar claims.

Even if you have done nothing wrong, the cost of defending such claims could well be high, so a PI policy will also ensure that your legal costs are covered.

A recent report also suggests that the recession could lead to a rise in professional indemnity claims against contractors by clients who claim that the services provided didn't meet their expectations.

Insurer Hiscox suggested that breach of contract claims are likely to increase during bad economic times as clients seek to cutback on existing project spend and reduce overall investment. As a result, current IT projects may be looked at in more detail.

Do you need cover?

Whether or not you want to take out PI cover may be irrelevant to many contractors, as increasingly clients insist that any contractors they hire are adequately insured.

Most umbrella company contractors are also covered by a blanket PI policy, but they should check the small print to ensure that they are specific IT role is covered. Additionally, once you leave the umbrella company, your may be exposed to claims against past contract work unless you have retroactive cover.

If you have a choice as to whether you cover yourself (or your limited company) for PI, or other business insurances, the choice really is up to you, however contractor PI cover is very competitively priced, and you may decide to play it safe rather than take the risk.

Further Information

You can find out more in our in-depth guide to contractor professional indemnity insurance.

You can compare PI policies via Simply Business, or visit our longterm partner, Hiscox for a quote.

To find out more about protecting yourself for contractor work done in the past, try our guide to professional indemnity insurance and retroactive cover.