We recently received a question from an American subscriber to our blog. Below is the response. His question is also transcribed first.

"So this would be good to have if I wanted to start web consulting? How do contracts with Limitation of Liability clauses play into indemnity insurance?"

Dear Wardell,

Thank you very much for your question. We have spoken about it at the BizCover offices and read below for your reply:

An Information Technology (IT) Liability policy is a Professional Indemnity insurance policy that is specifically tailored to the needs of an IT business and provides the most appropriate cover for a web consultant. IT Liability policies provide cover for acts, errors or omissions in relation to computer equipment or products (including hardware, software or firmware) which you (or your employees, consultants, subcontractors or agents) manufacture, produce, install, repair, service or distribute as well as for advice or work provided in connection with this equipment. Most policies also include additional cover in relation to conduct, such as fraud/dishonesty in certain circumstances, unintentional defamation and infringement of intellectual property such as copyrights, trademarks, designs, patents etc. They also provide cover for claims under Trade Practices legislation.

In addition to the professional indemnity cover, some IT Liability policies also include a separate section which provides Public and Products Liability cover. This means that cover is provided in respect of claims brought against you for unintentional personal injury caused by you (eg. sickness, disability, shock, false arrest, invasion of privacy) or physical loss, damage or destruction of property/loss of use of this property caused by you in the course of your business.

Most IT Liability policies include vicarious cover for the Insured Company or persons for claims made against consultants, subcontractors or agents who carry out work on their behalf. There is sometimes an option to purchase additional cover for the consultants, subcontractors or agents themselves but this cover is usually not automatically included in a standard policy.

Most Professional Indemnity insurance policies also cover some of the legal costs and expenses that are incurred as a result of defending the claims mentioned above or the costs associated with official investigations and inquiries by administrative or regulatory bodies.

As you can see from this overview, an IT Liability policy offers a broad scope of cover in relation to various aspects of an IT business and is often included as a requirement in IT consultants and contractors contracts.

Limitation of Liability clauses are more commonly used in the US than in Australia and not all types of liability can be limited. For example, it is not possible to limit or contract out of liability arising from your negligence and Australia has consumer protection legislation, such as the Trade Practices Act and the Fair Trading Act which prevent one from limiting or contracting out of liability in certain circumstances.

If you have any further questions, please feel free to reply. I would also suggest speaking with a broker in the US, as they would better understand the intricacies of US legislation.

Regards,
BizCover
http://www.bizcover.com.au/bizcover/

What Can You Expect from BizCover Professional Indemnity Insurance in 2009?

BizCover will be closed from the 24th of December to 4th of January (although we will still be responding to emails). We are committed to bringing you many changes in time for the new year.

Our website will have a dedicated News and Media section allowing you to browse articles mentioning our company, watch videos about Professional Indemnity Insurance (some recorded by our Directors) and download policy documents. There are many other interactive sections to come including an easier way to reach us through Facebook and LinkedIn.

You will also be able to find out more about the staff at BizCover, browse their photographs and profiles, and their interpretations of working in Professional Indemnity and Public Liability Insurance (Business Insurance). We're more than an online business.

We will also work hard to ensure that you receive great rates when it comes time to renew.

Regards,

The BizCover Team
http://www.BizCover.com.au

Global Financial Crisis, Professional Indemnity Insurance and BizCover

Below is some commentary from one of BizCover's senior brokers:

Whilst there has been a significant amount of press around the impact that the Global Financial Crisis is having on Directors & Officers Liability insurance, at this stage the impact on Professional Indemnity Premiums remains relatively insignificant.

Michael Gottlieb, the joint managing director of Mega Capital - a specialist Professional Indemnity Insurance broker - said that "while there is certainly a greater attention by the insurers in reviewing and underwriting individual risks, at this stage there is still sufficient capacity in the insurance market to ensure premium increases are minimal." However, the cycle is certainly turning and we are seeing a tightening in the breadth of coverage offered by insurers and a reduced appetite for new business, which is not perceived as a low risk industry and/or business." We therefore feel it is prudent to obtain multiple quotes to compare to your existing quote.

This is where BizCover comes in, yet again. BizCover allows businesses to get easy online quotes, compare between different premiums offered by leading insurers online and then purchase.

Regards,

http://www.BizCover.com.au

What is Professional Indemnity Insurance? - An Easy-to-Understand Guide

We have had an excellent response since the guide was published. However, we have since moved server, and the guide can now be accessed at: BizCover Professional Indemnity Insurance New Blog