IT liability insurance in Australia for IT professionals and contractors

IT liability insurance, also called information technology liability insurance, is a market term for a combination of covers. It commonly describes technology professional indemnity insurance combined with public and products liability insurance, and sometimes cyber insurance. What an IT liability insurance package includes varies between insurers.

Technology professional indemnity insurance is designed to cover claims that your advice, service or work caused a client financial loss. It may include legal defence costs, compensation and any settlement you are legally liable to pay, subject to the policy terms.

Public liability insurance is designed to cover claims if someone is injured or their property is damaged in connection with your business. Products liability insurance is designed to cover claims for injury or damage caused by a product you made, sold or supplied. It applies once the product has left your hands.

Software developers, IT consultants and IT contractors commonly arrange these covers together. See insurance for IT professionals for the covers upcover can arrange.

Cover depends on the policy and insurer you choose. Check the policy wording and its terms and conditions for what is and isn't included.

Key takeaways

• Client financial loss: technology professional indemnity.
• Injury or property damage: public and products liability.
• Data breaches and cyber attacks: cyber insurance, sometimes added.
• Contractor limits: commonly set by client, agency or government contracts.

Is IT liability insurance the same as tech professional indemnity?

IT liability insurance and technology professional indemnity insurance differ in scope. Technology professional indemnity is one cover, while IT liability commonly describes a package that adds public and products liability.

A combined policy includes professional indemnity and public liability, helping you avoid the cost of obtaining separate policies. Whether the combined policy also includes products liability varies between policy wordings, so always check with your broker or the team at upcover.

Cyber insurance is designed to cover costs after a data breach or cyber attack. Costs to your own business may include incident response, forensics, notifying affected people, data recovery and business interruption. Some policies may also respond to claims from customers or regulators.

See tech professional indemnity vs cyber insurance for where the two policies meet.

Who arranges insurance for IT professionals in Australia?

Insurance for IT professionals in Australia is commonly arranged by software developers, IT consultants, managed service providers and IT contractors. Related guides cover managed service provider insurance and software startup insurance.

What IT contractor insurance do clients ask for?

Clients, recruitment agencies and government buyers commonly ask IT contractors to hold professional indemnity and public liability insurance. Neither is a general legal requirement for IT contractors in Australia, but contracts may set their own insurance conditions.

Government contracts are one example. The Victorian Government's insurance in procurement guide lists the main types suppliers are frequently required to hold. They are professional indemnity, public liability, product liability and cyber insurance.

Clients commonly ask for a certificate of currency, a document confirming the policy is in force, before work starts.

What limits do IT contractor contracts set?

IT contractor contracts commonly state the professional indemnity and public liability limits the client asks for. The specified limit is the most the insurer may pay, subject to the policy terms. It may apply per claim, in the aggregate (the most the insurer pays in total for the policy period) or both.

See the guides to professional indemnity limits and public liability limits. An upcover representative or a broker can talk through what those limits mean for your business.

Is public liability insurance for software engineers required?

Public liability insurance is not a general legal requirement for software engineers in Australia, but clients and contracts may set their own insurance conditions. Public liability insurance for software engineers may respond to an injury or property damage claim, such as one from a client site visit.

Are IT liability policies claims made or occurrence based?

IT liability insurance can combine two policy bases: one for technology professional indemnity and another for public and products liability.

Professional indemnity is generally a claims made policy, meaning that a claim falls within the period of insurance when it's brought against you as a letter of demand or writ or civil suit, not when the services were originally provided. So it's important to keep your cover active and continuously in place (continuity of cover).

This then means that the retroactive date should cover you for services as long as you have been providing them. You can enquire with your broker or the upcover team about how you can also get an 'unlimited' retroactive date. The retroactive date is the earliest date of past services a professional indemnity policy may respond to.

Public and products liability is typically occurrence based. The policy in force when the incident happened may respond, even if the claim arrives later.

A complaint can arrive years after the services were provided, so the end of a policy matters. Run-off cover is designed to respond to claims about past work after you stop trading. How it works and how long it runs vary between insurers, and IT professionals commonly discuss it with a broker before a policy is cancelled.

What do insurance claims look like for IT professionals?

Insurance claims for IT professionals can include a software bug that costs a client money and a privacy breach involving customer data. The examples below are taken from upcover's IT and software development insurance page.

Hypothetical example: client loss from bugs

Scenario: A new release ships with a pricing bug that overcharges users and crashes the client's checkout for hours. The client issues refunds, loses sales and sends you a legal demand for their losses plus the cost of emergency fixes and retesting.

How cover may respond: Claims arising from software bugs, errors or failures in technology services may be covered under technology professional indemnity (information technology liability).

Hypothetical example: privacy breach response

Scenario: A stolen admin credential lets an attacker access a database with customer details. You must investigate, notify affected people and handle angry client calls. A customer group alleges their data was exposed and makes a claim for losses and distress.

How cover may respond: Claims arising from unauthorised access to or disclosure of personal data may be covered under cyber and privacy liability, including related response and liability costs.

Important: Claims scenarios are hypothetical examples only. Cover is always subject to policy terms, conditions and exclusions. Policy wordings may also vary between insurers. Always refer to the policy wording and its terms and conditions for details.

When to notify your insurer

If you're concerned about a particular client service or experience, you can always consider telling your insurer as soon as you become aware of an incident, complaint or circumstance that could lead to a claim. Importantly, this doesn't impact your premiums or cost of insurance until a claim arises, and it means that any future claim is triggered from the original date you notified the insurer, so it helps spread the risk of claims across policy periods too. You don't need to wait for a formal demand. Also keep in mind that notifying of a claim late may affect your claim.

You can start a claim through the make a claim page. Admitting liability, incurring costs or agreeing to a settlement before you notify your insurer may affect your claim. Starting a claim does not confirm that your claim is covered; your insurer assesses it under the policy terms, conditions, exclusions and limits.

What do IT liability and cyber policies commonly exclude?

IT liability and cyber policies commonly exclude losses that belong to another type of cover, contract-only liability and incidents known before the policy started. On a combined policy, some of the exclusions below apply to public liability as well as professional indemnity.

Technology professional indemnity

Exclusions commonly include, but are not limited to:

• claims and circumstances you knew about before the policy started
• services not listed on your policy schedule
• services provided before the retroactive date, the earliest date of past services the policy may respond to
• liability you take on under a contract that would not otherwise exist under the law (contractual liability exclusion)
• dishonest, fraudulent or criminal acts by you (dishonesty by an employee may sit under a fidelity or crime section, designed to cover losses from employee dishonesty, where the policy includes one)
• refunds, or the cost of redoing, correcting or improving your own work
• claims brought in courts in the United States or Canada
• fines and penalties that cannot be insured at law
• injury or property damage from an accident connected with your business, which generally sits with public liability
• cyber incidents and data breaches, which generally sit with cyber insurance

Public and products liability

Exclusions commonly include, but are not limited to:

• claims arising from professional advice or services provided for a fee, which generally sit with technology professional indemnity

Cyber insurance

Exclusions commonly include, but are not limited to:

• future lost revenue
• loss of intellectual property value
• claims that generally sit with professional indemnity or directors and officers insurance, which is designed to help protect directors and officers personally against claims about decisions they made in that role

Important: This list is not exhaustive. Exclusions vary between insurers. Always refer to the policy wording and its terms and conditions for the exclusions that apply to you.

How upcover can help

upcover arranges technology professional indemnity, public and products liability and cyber insurance for IT professionals and contractors. Technology professional indemnity can be arranged standalone or bundled with public liability. upcover works with 80+ insurance partners and can arrange quotes from a range of insurers.

• 70,000+ businesses covered
• 4.9/5 customer rating
• Certificate of currency available once your policy is confirmed

Get a quote for IT and software development insurance, or see technology professional indemnity insurance.

Frequently asked questions

What is IT liability insurance?

IT liability insurance is a market term for technology professional indemnity combined with public and products liability. Some insurers also include cyber insurance, or it can be arranged as a separate policy.

Do IT contractors need IT liability insurance?

IT liability insurance is not a general legal requirement for IT contractors in Australia, but clients and recruitment agencies may set their own insurance conditions. Their contracts commonly name the limits they ask for.

What is IT contractor professional liability insurance?

Professional liability insurance is a common name for professional indemnity insurance. For IT contractors, technology professional indemnity may respond to claims that their work cost a client money, subject to the policy terms. See what tech professional indemnity insurance is.

Who is covered under an IT liability policy?

An IT liability policy is generally arranged for your own business and the services listed on your policy schedule. Whether a policy responds to work you pass to subcontractors varies between policy wordings, so always check with your broker or the team at upcover. See the subcontractor insurance guide.

Does IT liability insurance cover cyber incidents?

Cyber incidents and data breaches generally sit with cyber insurance rather than technology professional indemnity. Whether an IT liability policy responds to a cyber incident depends on the insurer and the policy wording.

What is a retroactive date in an IT liability policy?

A retroactive date marks how far back a technology professional indemnity policy may look. Work done before that date generally falls outside the policy.

How much does IT liability insurance cost?

IT liability insurance cost depends on factors such as your services, turnover and claims history. The limits and excess you choose, and whether cyber insurance is added, also matter.

For starting prices for technology businesses, see startup business insurance costs. You can request a quote or speak to an upcover representative or a broker.

‍

_{The information in this article is general information only and does not take into account your objectives, financial situation or needs. It is not legal advice about the insurance and liability terms in your client contracts, and contract insurance conditions vary. Before deciding whether a product is right for you, read the policy wording and its terms and conditions. upcover arranges insurance products with selected insurers and underwriters and does not compare all general insurers or insurance products available in the market.}