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Professional indemnity claims for IT consultants have increased by more than 40% in the last four years according to the latest research from Hiscox. The findings also indicate that smaller consultants are increasingly at risk with the size of claims rising as well as the frequency. In May alone the insurer handled claims with a combined value of almost £5 million. Examples of recent errors by small consultants that have resulted in claims include: accidentally wiping a client’s data, supplying software that infringed someone else’s intellectual property rights, failing to integrate a new system and delivering a system that did not meet the client's brief. The largest of these was for a one-man consultancy whose client initially sued for damages in excess of £3 million, though this was subsequently reduced with the insurer's intervention. Even where the consultant is not at fault, the cost of specialist legal representation and expert evidence can run into hundreds of thousands of pounds to defend an action. Sam Franks, product expert for IT consultants at Hiscox, commented: ‘Clients are becoming more litigious, with technology playing such a critical part in the day to day running of businesses they are no longer willing to let mistakes go and bear the cost themselves. Larger consultancy firms have been aware of this for a number of years, but it’s now impacting on smaller professionals.’ He continued: ‘Many small consultants will only buy minimal Professional Indemnity cover and as the costs of PI claims escalate this is not sufficient. The claim and the costs of defending it can threaten their business and, often more importantly, their reputation. IT Consultants must therefore ensure they are fully protected by a specialist policy which is tailored to the unique requirements of the industry and the risks faced.’ To take advantage of CUK's IT contractor insurance click here Sep 16, 2003 Email this article Printer friendly page Previous Page
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