I Don't Need no Stinkin' MSP Insurance (or Do I?)
Few IT professionals could genuinely claim to have never made a technical mistake – perhaps accidentally deleting a user account or failing to notice that a backup job has been failing to complete.
Hopefully, when you’ve made these mistakes, you’ve escaped unscathed, and been able to make use of backups and contingency plans to keep you out of trouble.
Perhaps there have even been a few mistakes that you have managed to rectify without your clients noticing?
Sadly, not every IT professional gets away with it. Sometimes, they get sued.
Let’s be frank: if you don’t have msp insurance covering the work you do for clients, you’re taking a big risk.
Errors and Omissions Insurance
Errors and omissions insurance, sometimes known as professional indemnity, is probably the most important insurance policy you can have. It’s the insurance that’s there to protect you on that horrible day when you click your mouse in the wrong place and instantly realize that you’ve done something really bad.
If you think about it, you’re in a position to do a lot of damage to a business when you’re responsible for their IT infrastructure. Downtime can cost clients money, lost data can lose them customers and potentially land them in legal hot water. If you don’t cover yourself against the worst that can happen you are risking your finances, business and reputation by relying on nothing more than luck.
E&O insurance is usually quite inexpensive and based on your annual turnover. In the event of a legal fight, it can cover your costs, and usually the insurance company will negotiate on your behalf if things get ugly. If you don’t already have it, get it now.
There are a host of other insurance policies that may be either mandatory or desirable to protect your IT business.
Liability policies, including public liability, may be a legal requirement depending on where you do business. These cover things like being sued if someone slips and breaks their leg whilst visiting your office. You should review the laws in the country(s) you do business to make sure you have all the essential insurances in place.
Some other insurances, while not mandatory, are still worth considering.
Key man insurance is designed to protect those with businesses that are heavily dependent on certain personnel. Say, for example, that you run a successful IT consultancy. You may bill hundreds of thousands of dollars every year, but if you become indisposed or are critically ill, you income will drop to nothing. Key man insurance can protect your income if the worst happens.
While you are considering insurance in general, it’s also worth thinking about things like life insurance and health insurance. While running an IT business can be lucrative, it doesn’t offer the safety net of employment with its sick pay and holiday pay.
Think about all of the “what if” scenarios – a small monthly investment in insurance premiums can allow you to run your life, and your IT business, with far greater peace of mind.
Do you currently have E&O or other types of insurance for your business? Any suggestions? Feel free to leave a comment below.