Why Do IT Consultants Need Business Owner Insurance (BOP)?

IT consultants are a detail oriented group of individuals, which makes them particularly well-suited to small business leadership.  The issues and requirements of running a small business are abundant; the more “on it” owners and managers are the better.  But even the uber-organized like having options that save time and simplify things, right?  When it comes to small business insurance for IT consultants, that simplification comes with a business owner policy.

A business owner's policy or BOP insurance combines the basic small business insurance coverages into one policy.  With a BOP, you get protection from many property and general liability risks in one streamlined policy, and normally at a price that’s less than the individual coverages cost separately.

You should consider a business owners policy if you:

• need general liability insurance coverage,

• own and work with large amounts of data on a regular basis,

• own the building at which you work and need to insure the property,

• have employees that could act dishonestly or steal clients' property,

• have business equipment such as computers, printers, and furniture, or

• want to insure loss of business income if your business incurs property damage and must be closed for a period of time.

A typical business owner policy includes general liability insurance, the most important small business coverage and something all small businesses should have.  Other coverages that could come with a BOP include property insurance, business equipment coverage, electronic data loss insurance, business interruption insurance, crime insurance, vehicle coverage, and more often than not you can add coverages based on your business’s unique needs. 

While business insurance (other than workers’ compensation) isn’t a legal requirement, a business owner policy can be a real business lifesaver – especially if you rent or lease your office space, vehicles, or both.  In the case of rented office space, you’re not able to obtain property insurance but you still need protection for your equipment, computers, printers, and furniture. If you lease your equipment you may be asked to add the leasing company as a loss payee. A BOP provides this.  For leased vehicles, a business owner’s policy offers coverage if an employee is driving a leased company vehicle and has an accident for which your company is held liable.  This last benefit extends to all vehicles not owned by your business, including staff driving their own cars.

The number of possible scenarios in which an IT consultant with his own business would be glad he had a business owner policy are myriad; here are two examples to help make the need for a BOP more concrete.

1. You ask an employee to use his car for a quick trip to pick up more printer toner – and while he’s in route he gets in an auto accident.  Your business could be held liable for damages, which your BOP covers up to applicable limits if you purchase an HNOA extension.  BOP coverage may also apply to your staff driving their own cars when visiting clients.

2. A middle-of-the-night fire guts the building your leased office is in – a major setback whether you have a business owner policy or not.  But if you do, your policy should cover the cost to replace all of your lost equipment and furniture, up to your policy’s specific limits.  It should also cover the costs of moving to a new location (extra expense) and lost revenue.

These are just two possible scenarios in which an IT consultant with his own business would be glad he had a business owner policy.  The risk is real.  Protect your consulting business with a customized business owner policy.

Do you have BOP insurance for your IT business? Please share your thoughts in the Comments section below.

The contents of this article and the linked materials do not offer legal, business, or insurance advice related to the needs of any specific individual business. Claim scenarios are for illustrative purposes only and are subject to the terms and conditions of the policy in question. Please consult your professional advisor. 

Kevin Kerridge is the director of small business insurance for Hiscox, a company that provides customized business insurance for IT professionals including consultants, project managers, programmers, developers, designers, and many more technology professionals.