IT Contractor Insurance - What Do You Need?
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IT Contractor Insurance UK
As an IT contractor, you’re used to being parachuted into businesses to help them keep projects on track (or even get one that’s derailed back where it needs to be). Despite not being an employee, you’ll be responsible for the success or failure of the work, so it’s important to make sure you’re properly insured if something does go wrong.
This guide to IT Contractors insurance will go over which coverages you might want to consider before starting a new project, and give you an overview of how much a typical UK IT contractor might expect to spend on their insurance policies.
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What can IT Contractor insurance cover?
- Professional Indemnity
- Public Liability
- Employers’ Liability
- Cyber Security
- Health/Medical
- Business Equipment
How much will you pay?
Fill out a quote form here to compare prices.
Who might need IT Contractor insurance?
- Software Developers
- Project Managers
- Web Developers
- Analysts
- IT Consultants/Programmers
Is IT Contractor insurance required?
- While technically not a legal requirement, almost any business hiring contractors will require you to hold insurance before bringing you onboard. They’ll help to protect both you and your employer if something goes wrong, and are well worth the small investment.
Popular Types of Insurance for an IT Contractor
While you might need multiple different coverages, insurers will be happy to put these into a single, convenient policy for you to make sure you’re covered for all eventualities. This will save you a lot of time when you need to make a claim or renew, as you’ll only need to contact one provider, but do keep in mind you may get a better deal if you shop around and purchase your coverage individually.
| Common Types of IT Contractors insurance & What They Cover | ||
|---|---|---|
| 1. | Professional Indemnity | Protection in the event a business feels your advice or guidance caused them to lose money. |
| 2. | Public Liability | Coverage in the event you cause property damage or injury while working. |
| 3. | Employers’ Liability | A legal requirement in the UK if you hire any staff, even part-time employees or other contractors. |
| 4. | Cyber Security | Will cover expensive legal bills/compensation if you’re the victim of a cyber attack/leak and found at fault. |
| 5. | Health | As a contractor, you won’t get the additional health benefits full-time staff benefit from. Health/medical cover can provide that for you. |
| 6. | Business Equipment | Insures your laptops, devices, etc. in the event they’re stolen, lost or accidentally damaged. |
All of these coverages can apply whether you’re self-employed or run a larger consultancy business.
IT Contractors Insurance Examples
- Professional Indemnity: A business takes your advice during a migration, and it causes issues down the road. They have to redo the migration, and sue you for the cost of having the work done again.
- Public Liability: While working in an office space, someone trips over your laptop bag. They have to take a week off of work, and sue you for their lost earnings.
- Employers’ Liability: A contractor you’ve brought along for a warehousing project is injured while walking around the warehouse. They believe you failed to provide adequate safety equipment, and sue you as a result.
- Cyber Security: You take a client’s customer data home on your personal laptop, which is subsequently stolen. They sue you for damages as a result of the leak.
- Health: You have to take a week off of work due to a work-related injury. A percentage of your income is covered by your Personal Accident insurance.
- Business Equipment: Your laptop is stolen and needs to be replaced. Your Business Equipment insurance covers the cost of replacing the device.
FAQs
Yes, due to the advisory nature of IT contracting, it’s important you hold (at minimum) Professional Indemnity cover before taking on a new project.
If you’re bringing any staff onboard with you (as a sort of pseudo-consultancy) and you’re responsible for paying them, you’ll need Employers’ Liability. Public Liability, while not a legal requirement, is also highly advisable, just to avoid some of the risks you might face while on-site or around your customers and clients.
Hiscox are one of the most reputable and popular IT contractor insurers in the UK, and provide quality coverage to a large number of those in the world of IT freelancing.
That being said, they do only hold a 3.1-star rating on Trustpilot, with many complaining about difficult claims and sign-up processes. As always, do your own research before buying from any insurer.
As always, you should talk to your clients to see how much they expect you to hold before taking on a new project. Policies commonly range from £500,000 to £5,000,000 (but can go up to £10,000,000 and beyond if required).
To find cheap IT contractor professional indemnity insurance it’s critical to compare prices with multiple providers, which you can start here. Finding cheap Professional Indemnity as an IT contractor shouldn’t be any more difficult than finding well-priced coverage in other areas, like vehicle or home cover. Remember to shop around and compare as many quotes as possible, and look out for unique discounts or package deals insurers put together to incentivize you to shop with them.
PI PL insurance refers to Professional Indemnity and Public Liability insurance. You can read more about both here:
What insurances do you need to be an IT contractor?
At a minimum, an IT contractor should usually hold Professional Indemnity and Public Liability. Professional Indemnity is the industry standard, and while some do operate without Public Liability this will depend on whether or not you work in person with clients. The average Public Liability settlement in the UK is around £13,500, so it's just not worth taking the risk.
If you employ staff, whether full-time or part-time, employee or contract, then you must hold Employers Liability. It’s a legal requirement for any business bringing new staff onboard, so make sure it’s sorted out before you do.
If you receive confidential data from any of your clients on a portable device like a USB or laptop, or perhaps digitally in emails or fileshares, you’ll want to consider Cyber Security cover. It’ll help cover any legal costs if your customer believes you’ve been negligent with their data security, which might include their own damages or any incurred by their customers as a result of your error.
Finally, as a freelancer it’s important to consider both Medical/Health and Business Equipment cover. Both will help protect you from some of the additional risks you assume as a contractor, so if you’re not sure how you’d cover the costs if you had to take time off of work or needed to replace your laptop or phone (say, if they were lost or damaged in a fire) then they might make a lot of sense to help you mitigate risk.
How much does IT Contractor insurance cost?
The average cost for a traditional IT Contractor PI PL policy (£2M each) is just under £300 per year. Individually, £2M of Professional Indemnity will cost around £210 for the year, and £2M of Public Liability is just under £100 annually—a little less than the average cost of Public Liability insurance for the UK.
It’s worth noting that during our research we found a large discrepancy between quotes—indicated in the “range” section in the table below. As always, shop around appropriately and avoid taking the first option, as you may end up paying considerably more than you need to.
| Coverage Level | Average Cost | Range |
|---|---|---|
| £1M Professional Indemnity (PI) | £141 | £116 - £182 |
| £2M Professional Indemnity (PI) | £212 | £128 - £384 |
| £1M Public Liability (PL) | £92 | £84 - £98 |
| £2M Public Liability (PL) | £99 | £92 - £107 |
| £2M PI PL | £296 | £160 - £465 |
| £2M PI PL + 1 Employee | £356 | £253 - £570 |
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