Many businesses that provide services to clients have professional liability insurance (PLI). That’s because when you deal with people, you always run the risk of someone being dissatisfied with your product or performance. IT businesses are no different. Here are five reasons your IT company needs professional liability insurance.
1) Contracts require it. Many employers will not contract for your services if you don’t carry professional indemnity insurance. The insurance limits damage claims against your employer if you make a mistake.
2) Claims can bankrupt you. One claim may be all it takes to wipe out your assets. That makes the comparatively low professional liability premiums a bargain.
3) Mistakes are inevitable. It’s only a matter of time before one occurs. It may be a small issue or one that results in an allegation of negligence. The insurance also is called an E and O, or Error and Omission policy, and IT businesses need it just as an architect or a beautician does. In addition to professional errors, IT businesses must deal with the possibility that data will be breached or firewalls fail. In fact, you might consider carrying public liability insurance coverage in addition to your professional policy to protect against claims from third parties.
4) A stolen computer can result in a negligence allegation. If your equipment is stolen or damaged, the loss could mean an unfulfilled contract. Small companies are especially vulnerable because they don’t have satellite locations to rely upon.
5) The insurance covers a lot of issues. First party coverage protects you against the cost of notifying your clients of a possible breach, lowered cash flow because of an interruption in your business and perhaps even the cost of hiring a public relations company to do damage control for your image. That is important because you are liable for damages, even if you use a cloud provider host who is negligent.
If you own an IT business and have questions about how professional liability insurance can protect you, check out our website. We are experienced in protecting businesses like yours.