Insurance cover: A valuable benefit of ACS membership
13 April 2022
- Did you know that, as an ACS member, you’re automatically covered by insurance for ICT contracting/consulting activities you perform as a small business outside of your PAYG job?
The ACS and Insurance House have been in partnership for five years – providing members with a comprehensive range of professional cover under an umbrella policy at no additional cost. With more focus on ICT insurance since the introduction of the notifiable data breach scheme, we’ve been getting a lot of enquiries from members – so here’s the lowdown on exactly how you’re covered, and when you need to look more closely at your risk profile.
What does ACS member insurance cover?
The policy we’ve negotiated covers members earning up to $100,000 pa as a consultant or contractor (inclusive of any products supplied) – or $200,000 pa for Certified Professionals – and provides the following limits of liability:
• Errors & Omissions Liability Insurance (Professional Liability) up to $10 million
• Combined General & Products Liability Insurance (Public & Products Liability) up to $20 million
You can discover more about this arrangement on our website.
What are its special benefits?
We worked hard to create a package especially designed to protect ICT consultants. Not paying anything extra is a huge benefit, as a similar combined policy would typically cost you $1,000 or more a year. There may be cheaper policies available online – but they’re unlikely to cover all the benefits of the ACS/Insurance House policy included with your membership:
• Nil excess on claims
• Unlimited retroactive coverage
• Worldwide coverage excluding North America (North American coverage is an option to our policy)
• ‘Hold Harmless’ Contractual Liability
• Limitation of liability contracts
• A high level of public relation costs: up to $250,000 spent in protecting your reputation
• Access to highly experienced claims staff who can supply you with a specialist legal team, should you need it
What does it NOT cover?
The policy is designed for ICT professionals who are either just starting out as independent consultants, or doing limited consulting in addition to their principal employment. Once your practice takes off and you exceed the earnings cap, you will need to upgrade (see What happens when your ICT consulting business grows? below).
There are some other activities not covered, such as underground mining components and technology in manufacturing plants. So, it’s wise to study the ACS member insurance policy closely and talk to Insurance House if you need to upgrade it. You can obtain a copy, along with a certificate to show to your clients, by emailing email@example.com.
Why would clients make a claim against you?
The most common types of claim are failure to perform or failure to deliver what you’ve promised. Whatever the reason, your clients can only claim if they suffer financial loss. However, given the reliance on ICT services in an always on world, financial costs can quickly mount.
What are the different types of cover?
Many professionals get confused about the different types of insurance cover they need, so here are some practical examples* of the categories of claims you could face as an ICT consultant:
Professional Liability policies cover your performance of IT services and provision of IT products in your capacity as a consultant or contractor. Examples include:
• A client alleges negligence, breach of contract and misrepresentations about software and hardware you’ve provided
• You’re contracted to convert a phone system and your client holds you liable for fraudulent activity on the system
• It’s alleged you failed to provide project management services in a competent and diligent manner or provide suitably trained personnel (a recent insurance payout was $200,000).
Public Liability insurance covers you for personal injury and property damage claims arising out of the performance of IT services and provision of IT products. Real-life examples are:
• An ICT contractor’s office landlord made a claim when water damage in his kitchen affected other tenants to a cost of $13,000
• A fire on a contractor’s premises caused service interruption to third-party clients who received a payout of $280,000 for financial loss
Product Liability claims against you are less likely, but your charges for recommending or implementing an unsuitable product may be covered under Professional Liability (as in the first example above). Code you supply or customise might also fall under this category of insurance cover.
* Please note that, in regard to the examples above, the full circumstances of each situation must be considered with reference to all of the policy terms and conditions.
What about Cyber Insurance?
This is a very important question, as a lot of claims these days arise from cybersecurity incidents. In one recent example, a member’s client had their system hacked and held to ransom. The member was deemed responsible resulting in an insurance payout of $75,000.
Put simply, you are covered under the Professional Indemnity component of the policy for liability you incur to third parties when your own activities cause a data breach. However, if your own systems are breached causing financial loss to your clients or third parties, you may only be covered for your own financial losses under a specific Cyber Insurance policy.
Once you exceed the earning cap of your membership policy, the Insurance House package has developed for ACS members includes Cyber Liability protection. But if you have any doubts about your risks, you should contact firstname.lastname@example.org to arrange to speak with a specialist broker.
What happens when your ICT consulting business grows?
The insurance cover automatically provided with your ACS membership may not be sufficient should your practice grow. You will no longer be covered if your annual consulting/contracting income exceeds $100,000 (or $200,000 as a Certified Professional – which is another good reason for upgrading to CP!) Certainly, if you form a business and start employing other people, you must review your cover.
Insurance House has put together a comprehensive package for ACS members combining four policies suited to ICT contractors and businesses (Professional Indemnity, Public Liability, Product Liability plus Cyber Liability). You can choose to:
· Visit the Insurance House website to get a fast online quote for the cover you need
· Contact the ACS and we’ll put you in touch with an Insurance House broker who can advise on your options and customise a solution that meets your specific needs