A quick insurance lesson for small business owners

Professional indemnity insurance protects you from the cost of legal action being taken against you because of your professional work. As a contractor, you are exposed to suits from such diverse areas as professional negligence, intellectual property and trade practices. An example would be a bug in a program you wrote costing your client money, leading them to sue you for damages. Your client may attempt to recover any costs they sustain as a result of your negligence. The complexity of the systems that IT workers deal with means that this is a real risk to your business.

Public liability insurance protects you from the cost of legal action bought about if you damaged property or injured people while undertaking your professional duty. An example would be if a person tripped over a server you had installed and injured themselves. You could be liable for any medical expenses and compensation that they claimed.