A software bug is cheap for a long time – as long as it only lives on the developer's own machine. In production, though, faulty code can cause downtime, data loss, a bad business decision, and the loss is no longer the hourly rate for fixing it, it's the client's lost revenue. IT professions are a fast-growing area of professional indemnity insurance – this article maps out the claims pattern for developers, operations people, and consultants.
Four patterns keep recurring. Faulty delivery: the system doesn't do what it should, or doesn't do it the way it should, and the client faces operational disruption and extra cost. Downtime: a service outage following an update, migration, or operational fault – for a webshop or a booking system, even an hourly loss rate can be meaningful. Data loss: the cost and consequences of recovering lost or corrupted data. And a consultant's error: a poor architecture decision, a project plan that goes wrong, whose true cost only becomes clear months later. What they share is claims-made timing: the loss can surface well after the work was done – the retroactive date is the back wall of the cover here too (key article).
IT contracts are full of commitments: uptime, fault-resolution time, penalty clauses. Here's an important boundary: additional liability accepted by contract – standing behind more than the law requires – is typically excluded from insurance cover, and a penalty clause is a sanction, not a claim (exclusions map). The practical lesson: it's worth negotiating client-contract liability clauses with the policy in view side by side – a liability cap combined with insurance is what gives you a defensible position (client requirements, foreign clients).
Cyber insurance handles the business's own incident costs (recovery, notification, business interruption); but if the incident at the client occurs because of our professional error, the client's claim is typically a matter for professional indemnity insurance – the specific policy terms settle the boundary. Professional indemnity insurance is there for losses arising from a professional mistake; the two areas touch, but they're not interchangeable. A separate article covers that boundary: data protection–cyber boundary article.
Sizing IT cover properly starts with the client portfolio: who you deliver to, how critical their systems are, and what contractual commitments you deliver under (activity assessment, limit article). For foreign clients, territorial scope and certificate-readiness also come into play (territorial scope). If you'd like to work through your own portfolio: free consultation here.
A development team takes on a weekend database migration for a webshop. The job overruns, half the shop is down on Monday morning, and by the time it's fixed, two days of traffic have been lost. The claim is purely financial: lost revenue, extra working hours, reputational complaints. How the case turns out depends on three things. The contract: what did the team commit to in writing (deadline, liability cap)? The cover: can the professional indemnity policy's pure-financial-loss cover and limit absorb the claim? And the documentation: can the testing and backup steps be evidenced – in other words, was this an ordinary mistake, not reckless work? In IT, the three pillars are the same as in the trades, just with different tools: contract, cover, log.
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