We live in a technology-reliant world, and almost every business will need the services of an IT consultant at some point. As a Dublin-based IT consultant, you take your job seriously and aim to deliver quality work to your clients. Yet no matter how great you are at your job, a project may not go as well as expected.
So many things could happen that may put you in a tight spot with clients. You could for example, unintentionally send confidential information to the wrong client, and end up with a breach of confidentiality claim. To protect yourself and your business from these risks, you need professional indemnity insurance.
Professional indemnity insurance from AOR is designed to protect you against financial losses as a result of advice given, data breaches, negligent design specification or intellectual property issues. It covers you against lawsuits from your clients if they think you have been negligent or the custom-designed software you delivered is below the expected standard. Businesses are increasingly inclined to sue consultants over perceived failure or negligence, and the consequences of these lawsuits for a Dublin-based IT consultant can be costly.
You cannot fully protect yourself from being sued in Dublin, but you can have a peace of mind by protecting yourself with professional indemnity insurance. However, be careful when choosing an indemnity cover. You need to consider if the policy you are choosing is general or specifically designed for IT consultancy sector. Most Insurers have a tailor-made policy for IT consultants, so be sure to ask for it.
You should also read the fine print to fully understand the extent of coverage the policy will afford you. Is the policy clear on what it covers and what it doesn’t? Is the level of indemnity sufficient? The amount that the insurer will pay out in the event of a claim should be enough. Too high means you will be paying higher premiums than you need. Too low and the policy won’t cover you adequately in the event of a claim.
Common Professional Indemnity Risks for IT Consultants
In most cases, your client can sue you regardless of whether you have been negligent or not, or if the advice given was faulty or not. As an IT consultant, you are often expected to work miracles and transform the operations of a business, be it through custom-designed software, an overhaul of a website, hardware engineering or sales, or ton of other IT related services. There can often be unrealistic expectations, which can result in costly lawsuits. Here are some key areas where having professional indemnity insurance can come in handy:
Perceived performance failure
Measuring the success or failure of a project can be straightforward and clear. But in some cases, it can be a subjective exercise. If for example you take on a job to built custom-designed hardware or software for a client and it doesn’t live up to their expectations, the client can sue you.
This is the biggest reason why you need professional indemnity insurance in the first place. Any IT consultant can be sued for negligence, and regardless of whether the claim is valid or not, your insurance will pick up the tab. Mistakes like errors or omissions made by your employees, or loss of the client’s data are covered by indemnity insurance.
Loss of business
For example, if you provide hosting services and your web hosting partner gets hacked, it can result in downtime on the client’s website. Your client can sue you for loss of business.
Intellectual and copyright infringement
As an IT consultant, you have to be careful when undertaking projects. Intellectual infringement can be in the form of using unlicensed pictures on a client’s website or creating a web design that borrows heavily on another’s business’s model. A client can sue you for thousands of dollars, and if you don’t have professional indemnity insurance, you could end up paying from your pocket.
Other Ways to Protect Your Business
Although having professional indemnity insurance policy is the best protection you can have against damaging claims, there are two other relatively simple precautions you can take.
Use a Well-drafted contract
To avoid any future difficulties, make sure you have an iron-clad contract with your client before starting a project. Have your lawyer check your standard terms and conditions like payment terms, objectives, areas of responsibility and mediation process should a dispute occur. If you have to take on additional work before completing the original contract, make sure you sign a new contract that reflects the new responsibilities.
Keep comprehensive records
Having comprehensive records can come in handy in the event a claim is brought against you. You need to be clear on why you have taken a particular course of action especially if it heavily impacts the project.
It is clear that having professional indemnity insurance is important for IT consultants in Dublin. Mistakes happen no matter how careful you are, but the good news is, you can protect yourself and your business from damaging claims.