Suppose you design a database that has a glitch that keeps everyone at your client\u2019s company from accessing crucial business data for three days. The client sues you, the IT consultant, claiming they lost $500,000 in sales during the time the database could not be accessed.<\/p>\n
Or to put a timelier spin on things, consider if something you did allows a hacker to access to a client\u2019s sensitive data or introduce a virus into the computer system. You might be sued.<\/p>\n
As an IT consultant, you need insurance<\/a> more than other businesses for a variety of reasons. The tricky part is that these types of jobs are relatively new compared to those in other industries, and the laws are not fully defined. No standard yet exists on what is and isn’t acceptable in the industry. This will be the case until there are more legal precedents.<\/p>\n These are just some of the tech lawsuit risks every IT consultant should be aware of.<\/p>\n Dissatisfied clients could bring a claim against you, whether or not you have actually done something wrong. A client could bring a claim if he simply isn’t satisfied with the quality of your work, whether or not his claim is valid.<\/p>\n He may have expected you to deliver something you didn’t\u2014even if his expectation was unreasonable\u2014and as far as you understand, you delivered just what you promised. Or he may have simply expected something to function differently.<\/p>\n Even if the client is unreasonable, he could sue<\/a>.<\/p>\n A dishonest client who has a big legal department could sue you just to avoid paying money he legitimately owes you. Can you imagine explaining your work to a judge who doesn’t understand the technical ins and outs of the work you\u2019ve performed for the client?<\/p>\n Many clients won’t even hire you without you having proof of errors and omissions (E&O) insurance<\/a>. This type of insurance is important because it protects all parties involved in the event that you or your employees make a mistake that might cause serious financial or operational harm to the client. Many companies will just move on to a different consultant if you don\u2019t meet this requirement.<\/p>\n Your own personal assets could be at risk without coverage as well. Without insurance, if there is a judgment against you, your home, savings, and other possessions could be seized by a court. Even though the insurance may not be mandated by law, having it is vital.<\/p>\n You need protection. Suppose you lose a court case brought against you\u2014do you have $1 million to spare if you lose? Could you even afford to write a client a check for $50,000 if he sues you and wins?<\/p>\n This insurance is like a doctor’s malpractice insurance, only for contractors. As long as an act was not deliberate, you would be covered for a variety of things you or an employee<\/a> might do, including documentation errors, misrepresenting products or services, theft by an employee, exposing propitiatory information, defamation, slander, and other items.<\/p>\nThe Customer Is Always Right\u2014And They\u2019re Mad<\/h2>\n
Operating Without Insurance Is Risky Itself<\/h2>\n
Can You Afford Not<\/em> To Have E&O Insurance?<\/h2>\n