IT consultant insurance, on published starting prices

What insurers print for this trade

What an IT consultancy should buy

1. Read the client contract before choosing a limit. Enterprise and public sector contracts state a professional indemnity limit and often a cyber limit, and they usually require the cover to be maintained for a period after the engagement ends. Buy to the highest limit your pipeline asks for, because adding it mid contract is slower and dearer than starting there.
2. Understand that professional indemnity is claims made. Liability cover answers for events in the policy year; professional indemnity answers for claims made in the policy year, whenever the work was done. That means the policy has to stay in force after a project ends, and a consultant who lets it lapse has no cover for work already delivered.
3. Add cyber cover where you touch client systems or data. Professional indemnity answers for your negligent advice. A ransomware event in your own business, a breach of client data you were processing or the cost of notifying people is cyber cover, and the two answer for different halves of the same bad week.
4. Get the contractor question straight. A consultant working through their own limited company on a client site is often asked for public liability as well, because the client's site rules require it, and may face off payroll working questions that change how the engagement is papered. Both are worth settling before the first invoice.
5. Declare subcontractors and offshore delivery. Work you subcontract is still your liability to the client. Insurers ask whether subcontractors are used, whether they carry their own cover and where the work is performed, and an undeclared delivery team abroad is a material fact rather than a detail.

Common questions

Do IT consultants need professional indemnity insurance?

Not by law, but effectively yes by contract. Most corporate and public sector clients require a stated limit before signing, and framework agreements are explicit about it. It is also the only cover that answers for the claim an IT consultant is most likely to face, which is financial loss from advice or delivery.

What limit of professional indemnity do clients usually ask for?

UK contracts commonly specify £1m, £2m or £5m depending on the size of the client and the value of the engagement. The contract is the place to look rather than a rule of thumb, and it will also state how long the cover must be maintained after completion.

Is cyber insurance the same as professional indemnity?

No. Professional indemnity answers for your legal liability for negligent work. Cyber answers for incidents in your own systems: ransomware, business interruption, breach response, notification and, on many policies, the regulator's investigation. Consultants who hold client data usually need both.

Do I need public liability as an IT consultant?

Often, because client sites require it. It answers for injury or damage you cause while on their premises, which is a real if modest exposure for anybody who works on customer sites, and it is usually inexpensive beside the professional indemnity.

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