I've written a few tips on starting out in the consulting field. In my last tip on the subject I dealt with an issue that can be crucial in determining your success or failure as a consultant -- setting your billing rate. Today I'd like to discuss something else that can be just as important if not more so -- Professional Liability Insurance.
Think of Professional Liability Insurance as Malpractice Insurance for software developers and consultants. This insurance can provide you coverage in the event that one of your clients brings a claim against you and your work (it can happen.) Professionals such as architects and accountants have used Liability Insurance for years. Recently, software developers and consultants have embraced the protection that Professional Liability Insurance can offer (there's also a subset of Processional Liability Insurance designed specifically for software developers called Errors and Omissions coverage.)
Professional Liability Insurance coverage is not cheap, but the peace of mine it gives you may be well worth it.
I spoke with one associate of mine who told me she picked up a one million dollar Professional Liability policy for about $1,500 and is extremely pleased to know she's insured not only against mistakes she might make, but mistakes her clients believe she's made (obviously, there's a difference, but in a court of law that may not be so clear.)
Another associate of mine, Bob Lautenbach, president of Bayside Technology (http://www.baysidetech.com) points out that not only does Professional Liability Insurance provide you with protection, but in many instances, on prospective jobs he's been asked to bid on as a subcontractor, Professional Liability Insurance was a requirement in order to win the contract. Bob points out that coverage is available through most insurance brokers but be sure to read the fine print. Like all insurance policies, Professional Liability policies have exceptions and exclusions, so make sure you know what they are before committing.
The bottom line is that Professional Liability insurance is a cost of doing business and you should seriously consider it in your consultant practice.
Written by John Smiley, MCP, MCSD and MCT, author, and adjunct professor of Computer Science at Penn State University in Abington, Philadelphia University, and Holy Family College. John has been teaching computer programming for nearly 20 years.
John Smiley is president of Smiley and Associates, http://www.johnsmiley.com/smass/smass.htm a computer consulting firm located in New Jersey.
This was first published in January 2001