IT Contractors discussing

Top reasons why IT contractors need professional indemnity insurance

Posted on 11th September 2023 by

It’s estimated, according to 2023 figures by the Office for National Statistics, that the number of information technology (IT) professionals choosing to work as self-employed rather than in full-time roles in the UK is approximately 200,0001.

The popularity of contracting in the IT and communications sector, combined with the potential for lucrative contracts, as well as the rise in cyber vulnerabilities from malicious attacks, has given rise to a heightened need for comprehensive insurance.

As an IT contractor, insuring yourself against the risks involved with the rapidly developing IT industry has never been more important.

The risks, even if they are not immediately obvious, such as coding errors, missed deadlines, data breaches or breaches of contract, represent just some of the reasons for client claims that have cost some IT contractors much more than just an unhappy client.


To highlight the importance of professional indemnity insurance (PI) for IT contractors, we look at five key reasons why it is crucial to arrange the right level cover for your IT business.

1. Mistakes can happen, so it’s wise to ensure you’re covered

No matter how many years’ experience in IT that you might have, it only takes one mistake to give rise to a claim against you. For your own peace of mind, professional indemnity insurance is designed to protect you against an allegation that you have made a mistake in your work. To complement this cover, you may wish to consider public liability insurance (PL), which is designed to protect you against claims made where you were to blame for an injury or damage to a third party.

Both PI  and public liability insurance are commonly requested by clients before work can be awarded to a contractor.

2. No insurance, no contract.

Many IT contracts will require you to have PI, which can help limit the cost to the hiring client if you make a mistake resulting in a financial loss to your client, such as the costs associated with a project delay.

3. Many employment agencies won’t cover you.

Employment agencies can help you find your next IT contract, but their own insurance policies may not cover the work you carry out on a project. Ensure to check with your agency if you need to arrange your own insurance before you start any contracts.

4. Claims can be costly without insurance.

A claim for an error or omission in a project could cost a few hundred pounds, or it could run into tens of thousands. If you are uninsured or even under-insured, you might be forced to pay for the legal fees and compensation incurred if a claim is made against you.

5. Protect yourself against the unforeseen.

As a self-employed IT contractor you will likely supply your own technologies, such as a high-powered laptop. If your laptop was stolen, it would not only cost you hundreds of pounds to replace, but it could also delay time-sensitive work that you are undertaking for your clients.

This could put a strain on your business relationship and lead to a claim for failing to deliver a project on time. Worse still, if there is confidential client data on the stolen laptop, they could make a claim against you for negligence, in which case PI may help to protect you.


You can arrange your own IT contractor insurance quickly and online with Caunce O’Hara.

Get your quote here.

Alternatively, you can speak to an expert today on 0333 321 1403 for a quote.