Wednesday, February 06, 2013

Insurance for ICT Professionals

Occasionally I get asked about the insurance for my work as an independent ICT consultant. First of all there is workers' compensation insurance which my company is required to have to cover me against accident and injury as an employee. The there is Professional Liability Insurance to cover my clients.

Taking out workers compensation insurance is reasonably simple, being based on the salary of the employees and the risk for your area of employment. But Professional Liability Insurance requires filling out a detailed forms with your qualifications and major projects. Also you have to work out how much cover to have. The cover required will probably depend on what your major clients ask for. Large companies and government agencies usually have a standard clause with a set amount of insurance required in contracts and this is typically $5M to $10M.

The Australian Computer Society (ACS) has a "Professional Standards Scheme" which is part of the Professional Standards Councils Cover of Excellence scheme. This covered by Federal and State legislation which limits liability for members who are part of the scheme .The practical result of this is that if you meet the requirements for the scheme, you need only take out a set specified level of insurance, which can be as low as $1.5M.

I was already a Fellow of the ACS (FACS) and then applied to be a ACS Certified Professional (CP), having had my qualifications and experience checked. There is then a further special category of membership for the professional standards scheme called "Certified Computer Professional". Compared to becoming a CP, this is relatively easy, just requiring you to maintain your CP status by doing 30 hours professional development each year, using a standard notice about the scheme and taking out  Professional Indemnity Insurance policy.

One catch I found is that while in theory you could limit your indemnity to $1.5M, your client may not accept this. Rather than try to explain the scheme to clients I found it easer to set my insurance at the level most clients asked for. Also lowering the coverage does not lower the insurance premium proportionally (one tenth the coverage seems to cost half as much, not one tenth as much).

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