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Everything you need to protect your IT business

Key takeaways:

  • Client Relationship Agreements spell out what and how IT services will be provided
  • Employee Relationship Contracts make clear what’s expected of anyone you hire
  • Terms and Conditions protects you from disputes about what you promised
  • General liability protects you in the event of injuries or property damage
  • Professional liability covers mistakes and missed deadlines
  • Product liability protects from damage or loss caused by your products
  • Cyber liability covers damage caused by cyber thieves

IT experts are among the most in-demand professionals in every industry. You can make a good living as a freelancer or running a small business, but being an entrepreneur comes with some risks. It’s not enough to rely on handshakes or verbal agreements. You need certain business contracts and commercial insurance to protect your investment. 

There are three types of contracts that are essential for IT professionals to get in writing. There are also certain types of commercial insurance that IT workers should have. We highlight the essentials you need to do business and not get taken. 

Contract #1: Client Relationship Agreement

A Client Relationship Agreement (CRA) is a contract that spells out what services you’ll be providing to a client and under what circumstances. It also outlines steps that should be taken in emergencies. A CRA will help you avoid confusion, disagreements, and even possible litigation. 

Points to include in a CRA:

  • What services will be provided and how often
  • How long a project will last
  • What materials/information will be provided by the client
  • Number of hours expected per week
  • Total cost for the project(s) or ongoing services
  • How and when you will be paid
  • How to handle late or non-payment of invoices
  • Non-disclosure clause
  • Emergency protocols (who to contact, how to contact, the price for after-hours/weekend services, how fast services will be provided, etc.)
  • How often contracts will be reviewed
  • Procedures for terminating contracts

You also want to make sure your intellectual property is protected, including proprietary software/programs and how/when content or business materials you created can be used.

Contract #2: Employee Relationship Contract

If your business grows and you need to hire other employees, sub-contractors, or freelancers to handle the workload, you’ve gone beyond being a simple freelance business. While this type of growth is a good thing, it does mean you’ll be managing other people. It’s a good idea to draft an Employee Relationship Contract to ensure everyone is aware of what’s expected. 

Points to include:

  • The services worker will provide 
  • Hours per week/month worker will work
  • Price of worker’s services 
  • When and how you’ll pay
  • Employment type for tax purposes (employee, freelancer, or 1099)
  • Non-disclosure clause
  • Indemnity clause, which states that employee/contractor/freelancer will not hold you legally responsible for injuries caused by their negligence)

Contract #3: Terms and Conditions (Websites and Apps)

This contract pertains to things like terms and conditions, terms of service, privacy policies, and disclaimers, which are included on websites and apps. Not everyone reads these elements, but they’re necessary to protect yourself in case the client claims you didn’t deliver what you promised. 

What to include:

  • Privacy policy
  • Disclaimers
  • Transaction conditions (how payments will be accepted/processed and third-party fees)

Commercial insurance #1: General liability

As we mentioned above, it’s a good idea to have certain types of insurances if you’re an IT professional. General liability, for example, protects you from lawsuits related to injuries or property damage.

What it covers:

  • Bodily injuries
  • Medical bills
  • Property damage 

Your homeowner’s insurance may cover liability if you work from home, but check your policy as there may be limits or clauses regarding insurance for home-based businesses

Commercial insurance #2: Professional liability

Also known as Errors & Omissions insurance, professional liability protects you if you make a mistake or miss a deadline. Some clients (and states) require contractors/freelancers to carry professional liability, depending on the industry. 

What it covers:

  • Mistakes/omissions
  • Missed deadlines
  • Breach of contract
  • Negligence
  • Libel, slander, privacy violations
  • Advertising errors

Commercial insurance #3: Product liability

If you design, distribute, or sell products, (including software or programs), it’s a good idea to carry product liability insurance. This will protect your business against claims related to damage or losses caused by your products. It will protect you if someone claims that a product you made caused them bodily injury or damaged their goods. 

Commercial insurance #4: Cyber liability

This coverage is meant to protect your company if you ever become a victim of cyber thieves. All IT businesses should carry cyber liability insurance. It will help you pay costs related to recovering data, credit monitoring, and notifying customers.

Take care of your IT business insurance needs

Being a freelancer or entrepreneur means you must oversee everything, including commercial insurance requirements. The types of insurance you need may depend on your particular industry. It may also depend on whether you work from home, whether you see clients face-to-face, and whether you store customers’ or clients’ private data.

If you have questions about business insurance, contact us and request a quote. We will ensure you have the right coverage to protect your freelance enterprise. 

This blog and website are made available by the publisher for educational and informational purposes only. It is not to be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state.