Liability Insurance for IT Contractors: Do You Need It For Your Business?

If you are an IT contractor, I would say that it depends on the types of contracts you are doing, but in general I think it is a very good idea if not mandatory for every IT Contractor here in the United States to carry some kind of liability insurance.

Many of the clients who are looking to hire you will require that you to have some kind of liability coverage in order for them to execute a contract with you, and many of the staffing/recruiting firms will require it as well. In addition many of the staffing/recruiting firms and some clients may even have you add them as an additional beneficiary on your policy.

Liability policies typically come in 1/2 or 1 Million dollar increments, with a $1 Million policy being the smallest policy size that most insurance companies will write.

Coverage is pretty cheap, I pay $425 a year for a $1 Million policy. It is insurance, so treat it as such. You will probably never need to use it, but if you ever do, you will be glad you have the coverage. It is a necessary business expense that will help you sleep at night if anything ever does go wrong.

Like other insurance products that you have in your personal life, you don't want to be covered by some fly by night company that skips out , closes up shop or files for bankruptcy if you ever do have to make a claim. Pick a reputable company that has been in business for a while and will continue to be around for the long haul and one that is able to pay your claim if one should ever arise.

My policy covers not only Liability for the Technology Services work that I provide to my customers, but also Medical, Personal Injury, Damages to rented premises and Hired vehicle insurance.

When I initially purchased my policy, the agent walked through a pretty detailed questionnaire in order to best determine what kind of coverage that my company required. The questions were quite specific and allowed them to make many distinctions between types of services that I would and wouldn't be providing in my business and thus what kinds of coverage I really needed.

As an example, I will be providing software development services for business application, but not for real-time applications like aircraft flight software and the like, which I'm sure would be a higher level of liability and thus require a much higher premium.

Do you have liability coverage for your IT Contracting business? Have you ever had to make a claim?