Words of wisdom from our business insurance experts.
Technology Consultant Insurance: IT Consultant Coverage, Costs, and More
If you run any type of 21st-century business, you use some form of technology on a daily basis. Since technology is constantly changing, it can feel all but impossible for your company to keep up with cutting-edge hardware and software on its own. Fortunately, you don’t have to—not if you have a technology consultant on board, that is.
A good technology consultant will transform your company’s approach to technology for the better. These people can provide services like risk assessment, system security analysis, infrastructure plan creation, and technological training, among many others.
But like any employee on your payroll, technology consultants need to be covered by insurance for their protection—and yours. Here, you’ll find our guide to insurance policies for technology consultants and the average costs associated with this insurance.
What is a technology consultant?
Technology consultants are workers responsible for helping businesses use technology as effectively as possible. Other names commonly used to refer to these professionals include:
- Digital consultants
- Business and technology advisors
- Software consultants
- Computer consultants
- IT consultants
Regardless of their official titles, technology consultants have many different job duties to handle. Here are a handful of the many different tasks associated with these positions:
- Creating infrastructural plans
- Developing custom software
- Assessing risks
- Analyzing system security
- Providing management and advice on technological tools
- Resolving scaling problems
- Handling tech training
- Looking at competing technologies
Since technology plays a central role in almost every industry today, you might assume technology consulting is a growing career—and you’d be correct to think so. Over 2.5 million people were employed as IT consultants in the US as of 2023, and employment in the field increased by an average of 2.7 percent between 2018 and 2023.
Why do they need insurance?
Every person working for your company should have some level of insurance coverage, and technology consultants are no exception. Since these workers have close ties to the tech-related risks your business faces, you’ll need to ensure that they’re covered in regard to these potential issues. A few of the many dangers your technology consultants face regularly include:
These days, technology is a high-risk field, and data breaches (along with other types of cyberattacks) are on the rise. While data breaches come with inherent expenses, they could also open you up to lawsuits from disgruntled clients. Since technology consultants are particularly close to these risks, they (and you) need the protection that only tech insurance coverage can provide.
Errors and omissions
If your technology consultants miss a deadline or provide well-intentioned advice that leads to a financial loss, it could have severe consequences—especially if you run a small company. Without the right insurance, your business could find itself embroiled in an expensive lawsuit with minimal financial assistance.
Of course, technology consultants don’t exclusively face dangers related to their job duties. Like any worker, these people can get injured on the job, accidentally damage a client’s property, or get in a car accident while driving a company vehicle. Naturally, having the right insurance policies in place can help these employees and their employers in such situations.
What insurance do they need?
Considering these risks, it’s easy to see how your technology consultants can benefit from insurance coverage. Still, you’ll need an understanding of the policies these workers should have. A few insurance policies that can help protect technology consultants at your company include:
Technology errors and omissions insurance
Qualified technology consultants work hard and pay close attention to what they’re doing, but they aren’t superhuman. These people could miss a deadline on an important project or inadvertently cause website downtime. An E&O policy can help you deal with breaches of contract, failure to deliver agreed-upon services, mistakes, and oversights. With one of these policies, you’ll be ready to deal with lawsuits accusing your business of professional negligence—whether or not you were actually at fault.
However, not every E&O policy will protect you if a client suffers the consequences of a data breach and files a lawsuit in response. For that scenario, you’ll need an errors and omissions insurance policy that comes with third-party cyber liability coverage—otherwise known as “technology E&O insurance.”
No one enjoys thinking about the potential threat of their workers “going rogue,” but employee misconduct is all too common in today’s working world. That’s where fidelity bonds come in. Fidelity bonds are intended to protect you and your customers in this worst-case scenario. And even if you have total trust in your employees, fidelity bonds are often a requirement in client contracts.
There are two types of fidelity bonds you’ll want to familiarize yourself with: first- and third-party fidelity bonds. First-party fidelity bonds protect your company’s property from less-than-trustworthy employees; to that end, they cover your expenses related to fraud, embezzlement, theft, and forgery. On the other hand, third-party fidelity bonds cover losses your clients could experience due to these actions.
Cyber liability insurance
While data breaches aren’t the only tech-related threat businesses face, they’re definitely something you can’t afford to ignore. If you’re affected by one of these breaches, you’ll have to deal with directly-related expenses like paying to notify your customers and investing in monitoring systems for affected clients. Your customers could also hold you liable for the loss of their personal information—and without any form of financial protection, dealing with that can be much more expensive than you might assume.
Cyber liability insurance is meant to protect you when a data breach results in the compromise or theft of your sensitive data. Along with that, it can help out with expenses like customer notification and fraud monitoring services. As is the case for fidelity bonds, both first- and third-party cyber liability insurance policies exist—make sure you’re covered for both.
General liability insurance
Even if your company doesn’t have a technology consultant, there’s no avoiding your need for general liability insurance. In fact, one of the first insurance policies any business should get is a general liability insurance policy. These policies offer coverage related to:
- Client injuries. No matter how seemingly risk-free your workplace is, a visitor could slip and fall—and even that could be enough to trigger a lawsuit. With general liability insurance, your medical bills, legal fees, funeral expenses, and court-ordered judgments will all be covered.
- Advertising injuries. Even if you do your homework before launching a new marketing campaign, you could copy another business’ slogan or logo without trying to. These inadvertent IP issues are covered by general liability insurance, as are libel and slander.
- Damage to client property. While it’s never in your best interest to damage a client’s belongings, this can be an especially serious issue when technology consultants are involved. After all, these employees work with computers and other costly devices every day. Fortunately, general liability insurance can help you pay to replace damaged or destroyed client property.
Workers’ compensation insurance
Even though technology consultant jobs aren’t the most physically demanding roles in the world, these workers can still get injured on the job. And if you’re at fault for these injuries, you could be vulnerable to litigation and potential losses.
Workers’ compensation insurance can make it easier for you to pay for work injury/illness-related expenses and employee injury lawsuits. On top of that, you’ll likely need this type of coverage to comply with state laws—almost every US state requires employers to offer workers’ comp.
Commercial auto insurance
Commercial auto insurance is one of the more expensive policies you’ll need in order to cover your technology consultants and other employees. But this insurance coverage is absolutely worth the expense—an uninsured car accident could cost your company thousands of dollars.
A commercial auto insurance policy will help you cover the medical bills and property damage arising in the wake of an accident. Beyond that, this policy will cover the cost of accident-related lawsuits and even expenses related to auto damage from vandalism or weather.
How much does it cost?
While you need insurance to protect your technology consultants, you must also know how much this insurance will cost you. On average, this is how much your company can expect to pay for these insurance policies:
- Technology errors and omissions insurance: $60/month
- Fidelity bonds: Less than $90/month
- Cyber liability insurance: $145/month
- General liability insurance: Less than $30/month
- Workers’ compensation insurance: $35/month
- Commercial auto insurance: $200/month
Regardless of what industry your company focuses on, it can benefit from the services of one or more technology consultants. Whatever you choose to call these employees, they can do everything from improving your current hardware and software to helping your business plan for the future.
Of course, technology consultants are just as susceptible to risk as anyone else working for your company. Investing in the right insurance policies will protect these workers (and your business) from all kinds of threats. Technology E&O insurance, cyber liability insurance, fidelity bonds, and other policies will allow your consultants to put 100 percent of their energy towards keeping your business at the forefront of technological development.