Insuring IT Consultants? Here’s What You Need to Know

Jun 2021

Technology Consultants, also known as IT, ICT, or digital consultants, help businesses with the development and application of Information Technology (IT). An IT Consultant works on large transformational projects as opposed to in-house IT upkeep, evaluating an existing process or processes and solving problems, implementing new strategies, and permanently improving their client’s business going forward.

IT Consulting services range from creating a technology to managing a system of processes. They may help in planning and developing new IT systems, or assessing existing systems for issues and improvement. Most IT projects are focused on implementation. Specific tasks may include performing studies, checking the cost of their proposed solution, planning the project implementation, and making quality controls.

What Could Go Wrong

The most common risks IT consultants face stem from their relationship with their clients, data security, and the unpredictability of the market.

Dissatisfied Clients due to:

  • Miscommunication:Clear communication is unquestionably necessary for a Consultant.
  • Failure to deliver on expectations:This includes setting and meeting realistic goals, setting timelines the consultant can deliver on and doing so as well as understanding and communicating expected costs. Missing deadlines, having cost overruns, and generally failing to deliver on expectations are all recipes for an unhappy client.
  • Strategy/planning issues:Problems in this can also lead to a failure to deliver on expectations.
  • Misrepresentation:Unlike the previous issues which are generally problems with predictions, statements of fact that prove to be untrue, can not only lead to a contract being voided, but can also lead to legal damages being pursued.

Data Breaches. Often consultants will gain access to sensitive data in order to perform their job and typically store client data on their servers. Using best cybersecurity practices should keep this from becoming a serious problem. A data breach could cause massive damage and be costly, not just in terms of money, but reputation as well.

Unpredictable Markets. Putting aside the predictably unpredictable markets in general, there are also shifting customer behaviours to consider. Unexpected costs, late client payments, inconsistent business can all be problems for a stable income. Consultants should maintain networking practices, make clear payment arrangements in their contracts, offer their clients payment plans, and be sure to set aside income in better times for leaner times.

Other risks can include:

  • Scope creep
  • Theft and fraud
  • Injuries
  • Employee medical issues
  • Property damage or loss

The Advantage of Tailored PL Insurance

SWG PL – IT/Technology Liability insurance is a packaged E&O and CGL policy providing coverage for the multitude of exposures faced by technology companies. Its tailored E&O covers a broad range of IT risks for small to large-sized firms operating in various disciplines, including programming, IT consultancy, IT project management, network support services, website design, and more.

Coverage highlights:

  • Distinct insuring agreements provide affirmative third-party coverage for:
  • Professional and Technology Services Liability
  • Media and Advertising Liability – includes coverage for infringement or dilution of trademark, title, slogan, trade name, trade dress, service mark, service name, copyright, plagiarism, and misappropriation of ideas or information
  • Technology Products Liability – includes loss of use of technology products
  • Network Security and Privacy Liability – includes coverage for the failure in security that results in unauthorized access, use, tampering, denial of service or introduction of malicious code into data or systems, including disclosure of personal identifiable information
  • Optional Cyber extension (first-party coverage)
  • Limits available up to $5mm Defense costs in addition
  • Claims made policy form; Insurer has the “duty to defend”
  • Coverage on a worldwide geographical basis

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Content is current as of the date of broadcast and is subject to change without notice.