IT liability insurance for freelancers and IT firms

IT-Haftpflicht (IT professional indemnity insurance) is professional liability cover for IT freelancers or IT companies.

It reliably protects you as a freelance IT specialist against the financial consequences of professional errors, such as missed deadlines, system failures or cyber damage to third parties. Thanks to comprehensive security, you can fully concentrate on your clients.

Who is it for?

Programmers
Database developers
Open-source software developers
Mobile application developers
Software architects
Web developers
SAP developers
Java developers

IT consultancy
IT consultants
SAP consultants
SEO/SEM consultants
BI consultants
CRM consultants
Data managers
Project managers

Network and trade
Equipment manufacturers
Equipment dealers
Systems administrators
Software dealer
IT professionals
Electronics engineer for IT systems

This is not an exhaustive list of professions and activities covered by the protection. Both the self-employed (Freiberufler and Gewerbetreibende) and companies (Unternehmen) can be insured.

Is professional indemnity insurance required in the IT sector?

For regulated professions (doctors, lawyers, architects, etc.), Berufshaftpflicht (professional indemnity insurance) is compulsory in Germany.

This obligation does not apply to the IT sector; nevertheless, there is also a risk of serious damage here, for example, due to legal breaches, missed deadlines or cyber damage. In the event of claims, you risk your personal property and finances.

Furthermore, some clients require professional indemnity insurance before a project contract is signed, as a safeguard against unforeseen circumstances. The same applies to project intermediaries, who regularly request liability insurance, particularly in the IT sector.

Examples of claims covered by the insurance

Unilateral termination of the contract following unsatisfactory results
Following several missed deadlines and numerous improvements, your client is still not satisfied with the service you provided and has the right to terminate the contract. You have incurred significant project expenses, such as subcontractor costs. Additional cover under an optional module protects you against such a scenario.

What does IT-Haftpflichtversicherung cover in the event of a claim?

First of all, it is checked whether the claims of third parties are justified and to what extent the obligation to compensate for damage exists.

If the claims are groundless, the insurer will provide “passive legal protection”, which covers costs such as legal and court fees or expert opinion expenses. And even if the claims are justified, the insurer will pay them for you.

A settlement (Vergleich) is also possible, for example if the review shows that you are responsible for the damage, but it is less than the amount originally claimed. In this case, the insurer takes over negotiations with the other party.

Additional module “Company, product and environmental liability insurance”

Commercial, product and environmental liability insurance / Environmental damage insurance

With this add-on module, insurance cover extends to property damage or personal injury, applies in the field of public law and contractual liability, and also provides cover in the event of claims by third parties without fault on the part of the insured person. The following risks are insured:

Object risk
— Participating in or organising business trips,
— organisation and management of corporate events, seminars or training courses,
— organisation and running of events for the company itself,
— participation in trade fairs, exhibitions or events,
— use of land, buildings or premises as an owner, tenant or lessee exclusively for the insured activity. Claims arising from a breach of Verkehrssicherungspflichten (the duty to keep premises safe) for which the insured person is responsible in respect of the aforementioned properties (e.g. structural maintenance, lighting, cleaning, gritting and snow clearance) are insured. Airfields are not insured,
— the rental, leasing or other transfer of built-up and undeveloped land, buildings or premises belonging to the insured’s commercial assets to third parties up to a gross annual rental amount of 250,000 euros. Claims arising from a breach of Verkehrssicherungspflichten for which the insured is responsible in respect of the aforementioned objects (e.g. structural repairs, lighting, cleaning, gritting and clearing snow from pavements) are insured here. Airfields are not insured,
— the use of leased or hired passenger cars and trailers subject to registration, exclusively for business travel in Germany and abroad.
— the deployment of security personnel, data protection officers, company doctors, or persons responsible for overseeing company premises,
— the maintenance of the company’s medical or social facilities and sports clubs intended exclusively for the insured company,
— activities of the factory or enterprise fire brigade,
— damage, destruction or loss of property (other than money, securities, documents, jewellery, valuables) belonging to employees and visitors,
— incorrect installation or loss of other people’s keys or other people’s code cards for doors or locking systems, if they are in the lawful possession of the insured person (the insurance cover includes the costs of necessary replacements or the replacement of locks, locking systems, keys or code cards, as well as temporary security measures),
— damage or destruction of rented buildings and premises (damage to rented property), unless this constitutes an insured environmental risk,
— loading and unloading of vehicles and containers,
— operations (such as processing, repair or testing) at third-party facilities,
— damage to, destruction or loss of movable property of third parties, provided that the insured rented, leased or borrowed these items for a period of up to 6 months (loss of custody and control),
— use and storage of model aircraft and/or flying drones for photo, thermal imaging and video recording for the purposes of the Company. The maximum weight of the model aircraft and/or flying drone, including the camera, must not exceed 5 kg. Regular maintenance of the model aircraft and/or flying drones is mandatory, in particular the rectification of obvious defects.
— operation of photovoltaic and solar thermal systems.

Product and service liability
— manufacture of products,
— trade in goods,
— services such as consulting and maintenance.

Environmental damage insurance
Environmental damage is:
— damage to protected species and natural habitats,
— damage to water bodies,
— soil damage,
Damage caused by environmental impact is damage in which substances, vibrations, noise, pressure, radiation, gases, vapours or heat spread into the ground, air or water at varying rates, including gradually.
Insurance cover exists solely in respect of environmental damage which is the direct result of a sudden and accidental disruption of the insured’s or a third party’s planned activity occurring during the period of insurance.

Additional modules for IT-Haftpflichtversicherung

Eigenschadenversicherung (first-party loss insurance)

Additional module for first-party insurance

This optional insurance cover provides for:

Customer cancellation of the contract. Insurance cover applies in the event of a justified full or partial withdrawal from the contract. Material and personnel costs are covered, including the fees of self-employed persons and freelancers, but not lost profits.
Reputational damage. The insurance cover extends to necessary expenses for an external public relations consultant to prevent, avert or mitigate impending reputational damage. The expenses must be agreed in writing with the insurance company.
Modifying or blocking your own website. Protection against unauthorised interference by third parties, resulting in changes to or blocking of your website.
Loss of documents. Expenses for the recovery and production of lost documents (including electronic ones) required to fulfil the order are covered.
Domain protection insurance. Insurance cover extends to the loss of a domain name or control over a homepage through the fault of a third party.
Fines and penalties. The insurance company shall reimburse fines imposed on the insured person by a data protection authority or a court for data rights violations (including data breaches), provided they are insurable under applicable law.
Employee fidelity. Protection against intentional financial crimes committed by employees, such as the misappropriation of company funds.
Third-party fraud. Protection against direct financial losses (e.g. additional expenses) resulting from the falsification and concealment of documents by third parties for the purpose of unjust enrichment.
Loss of key personnel. The insurance cover applies in the event of unplanned dismissal due to repeated employee misconduct, incapacity for work exceeding 6 weeks, or death.
Damage caused by co-insured persons.

Cyber damage insurance

Additional module for cyber and first-party data loss insurance

The module provides protection against unauthorised interference with the IT systems, programs and electronic data of the insured person. Compensation is provided for the costs of:

Access, use or disclosure of personal data that is available to the insured person within the scope of the insured activities.
Recovery or repair of a website, network, computer systems, software or electronically stored data.
The costs required to prevent the alteration or blocking of data, their reduction, or restoration to their original state.
All expenses that must be incurred to continue operations as a result of the interruption.

Directors’ and officers’ liability insurance (D&O)

Additional module for D&O third-party liability insurance

Insurance cover extends to claims for financial loss brought by a third party as a result of a breach of duty committed in the course of activities at the insured companies by current, appointed or substitute persons:

Members of the executive bodies (e.g. board of directors, management, executive board),
Members of supervisory bodies (e.g., supervisory board, administrative board, advisory board or board of trustees).

How do you determine the sum insured?

The appropriate sum insured for your IT-Haftpflichtversicherung always depends on your personal professional risk. To choose the right amount, you should consider how expensive the highest expected damage to your business could be.

Important indicators are the size of your client and project relevance: if you are responsible for implementing software for an international financial company, the consequences of any damage are likely to be more serious than if you were relaunching a local butcher’s website.

Your turnover, on the other hand, is not an important indicator: the consequences of a professional mistake are not necessarily related to the size of your pay.

Therefore, general recommendations for choosing the sum insured (for example, based on annual turnover) should always be treated with caution. If you are unsure about your choice, we will be happy to help you.

Most insurance companies allow you to increase the sum insured under your policy at any time if, for example, clients demand higher amounts or you have secured a new major contract.

Are there any exclusions from the insurance cover?

As with any insurance policy, IT-Haftpflichtversicherung also has certain exclusions and cover limitations, for example:

Claims in connection with wilful breach of obligations, in particular wilful deviation from the client’s rules or instructions.
You are not insured if you intentionally, i.e., consciously, breach contractual agreements (breaches due to minor or gross negligence, e.g. of third-party rights, are insured).
Claims in connection with fines, penalties and individually negotiated contractual penalties (except for a data breach fine or a contractual penalty for breach of confidentiality).
Refund for a service not provided (although the client’s claim for compensation for damage due to non-performance or poor performance can be insured!)
That is, you will not receive a refund of your salary or fee if you have not yet fully rendered the service agreed with the client.
Special product recall expenses.
However, third-party claims for damages due to a product defect (e.g. hardware or software) are insured.

How much does IT liability insurance cost?

The annual premium is calculated individually based on at least three factors:

Your turnover (higher turnover means a higher insurance premium)
Your chosen sum insured (the higher the sum, the higher the premium)
Selected additional modules

For example, a basic tariff without additional modules, with an annual turnover of €50,000 to €70,000 and a sum insured of up to €300,000, will cost around €265 a year excluding insurance tax (≈ €315 including tax).