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IT Contractor Insurance
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Professional Indemnity insurance claims against contractors could rise due to downturn
Posted Feb 27, 2009
A leading professional indemnity insurance provider warns that the recession may result in more claims against IT contractors by clients who claim that the services provided did not meet their expectations.
Breach of contract claims
Specialist business insurer, Hiscox, says that IT consultants should manage client expectations carefully, they should spend more time scoping IT project work from the outset and certainly shouldn't over promise.
Hiscox points out that the top reason behind breach of contract claims is listing a defective service (or product) from an IT supplier.
The insurer says 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.
One of the most convenient ways to cut costs is to pursue a breach of contract claim against an IT contractor or supplier company, claiming that they were not provided with the IT service they were originally promised.
Check your professional indemnity cover
Sam Franks, from Hiscox, said:
"The current economic downturn highlights the importance of IT suppliers, big or small, properly scoping a project from the outset to avoid costly legal action. It is critical that they set down in the clearest terms what they intend to deliver with realistic costs and timelines, and then by careful management of the contract and client expectations, ensure any potential room for misunderstandings or disagreements is minimised.
"Many IT companies also do not realise that their existing professional Indemnity insurance may not provide adequate cover. It is absolutely critical that IT contractors and companies, from the one man band operators right up to the multi-million pound IT businesses, check that their professional indemnity cover provides for breach of contract. They should also notify their insurer immediately if they suspect there might be a problem, which often first shows itself through an unpaid client bill."
IT Contractor insurance cover
Find out more about professional indemnity cover, as well as other types of cover in our IT contractor insurance guide.
Or you can get a Professional Indemnity quote right away from Hiscox.
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