The most important insurances for IT professionals

Do you work in the IT sector or are you planning to further your education in the technology and software sector in order to get a job in the industry later on? Or are you perhaps on the road as a freelancer? Then you need the right protection for your work and your everyday life. Just like in any other job, there are always risks that can present you with major challenges in the event of an emergency. With the right insurances at your side, you can take precautions and have optimal protection. In this article, we would like to show you which IT insurances will make your life easier and enable you to work in the IT sector without worries. You can also find out whether you are already optimally covered or whether there is still room for improvement!

 

Reading time 15 min

 

1. First, you'll get all the information about why insurance is important in general.
2. We give you an overview of the most important IT insurances and why you need them.
   1. This includes occupational disability insurance
   2. Of course also health insurance
   3. Legal protection insurance
   4. Of course also old age insurance
   5. Content insurance
   6. A cyber insurance
   7. A liability insurance for IT professionals, which is once again divided into different categories such as:
      1. Professional liability insurance
      2. Business liability insurance
      3. Financial loss liability insurance
      4. Personal liability insurance
3. Afterwards we draw a conclusion and give you a recommendation how to find the right insurances, which are individually tailored to you.
4. Last but not least, we answer further questions and answers about IT insurance in the FAQ.
   1. What is business interruption insurance?
   2. What are consequential damages?
   3. What are damages caused by delay?
   4. Do you need electronics insurance? And what are the pros and cons?
   5. What insurance will help with a workplace burglary?

 

Why is insurance important in general?

Before we start with the presentation of the most important IT insurances, we would like to briefly explain why insurances should be taken out in the first place and why they make your life much easier, even if you might not have to use them for a claim in the end. As a rule, insurance takes effect when, without it, you would be faced with major financial problems that could even threaten your existence.

 

For these reasons, it is worthwhile to take precautions with an insurance policy as an IT professional:

1. Security: A big advantage of having the right insurance is that it gives you security and, in a way, peace of mind. Because you know that if something should happen, you're covered and you'll get the appropriate support. You will not be left alone with the costs that arise. The insurance company will help you financially.
2. Minimizing the risk: Of course, the first point also includes the fact that with every insurance policy you take out, you minimize the risk that an unforeseen event will take you out of life financially.
3. Asset protection: Hand in hand with the first two points goes the advantage that you secure your assets. Whether it's money you've saved, stocks, or even real estate, a car, or other items, you can protect them with insurance. In an emergency without insurance, it can always be that you have to use it to get you out of your misery. Otherwise, of course, with insurance you can directly protect items from damage or loss through insurance or would get them replaced by their financial value.
4. Business coverage: If you work as a self-employed IT professional or entrepreneur, then some insurances are also important to cover your business activities. The keywords are liability risks, business interruption, property loss and other business risks.
5. Long-term goals: Some insurance policies are also hedges for the future. They offer the opportunity to invest or save for the long term. This will then benefit you later.

 

An overview of the most important IT insurances and why you need them

Now we come directly to the insurances you should take out as an IT professional. These insurances protect you from financial challenges and allow you to go about your daily work with a minimum of worries. We have selected the ten most important insurances for you and explain below why they are advantageous for you and in which cases they are effective.

Occupational disability insurance (BU)

The occupational disability insurance, also called BU, is one of the most important insurances for employees, small traders, entrepreneurs and actually for everyone who works and has not provided financially in such a way that he can finance his standard of living until the end even without income. Here is an overview of the most important information:

What does the BU cover?

With an occupational disability insurance you can protect yourself financially against occupational disability. When exactly you are considered to be unable to work also depends a bit on how the insurance company, with which you are then insured, defines occupational disability. As a rule, however, occupational disability is assumed when a person is permanently no longer able to perform his or her previous occupation for health reasons.

For whom is the insurance suitable?

BU is suitable for anyone who is gainfully employed and relies on a regular income. Especially persons without sufficient financial reserves, persons with families, self-employed persons, freelancers and persons who have a profession with a higher risk should take out an occupational disability insurance.

What is the approximate cost of disability insurance?

The cost of an occupational disability insurance policy can vary greatly, as it depends on many factors such as your age when you take out the policy, your occupation, your state of health, the desired pension amount, and the contract term. It is difficult to give exact figures. Because the calculation is simply very individual. For example, you may only pay 20 euros a month, but 100 euros or more are also possible.

What do I have to consider when taking out a policy?

When taking out your occupational disability insurance, you must always pay attention to the point in time at which the insurance policy assesses you as occupationally incapacitated. In some policies, you are classified as unable to work if you can no longer perform your last job. Other policies define occupational disability more broadly and may deny a benefit if you are still able to perform another occupation.

In addition, you should also pay attention to a subsequent insurance guarantee. You can benefit from it! If you want to increase your insurance benefits, for example, because you have more financial means, then there is no new health check if your policy includes a subsequent insurance guarantee.

Also note whether there is a waiting period, i.e. a period without benefits. This is not necessarily a bad thing if, for example, it is only a few years and you are still young and physically fit. The probability is very low that you will then need your BU soon. Depending on the circumstances, however, it may be a reason not to take out a policy.

By the way, you have to answer the health questions very precisely and honestly. If you conceal relevant health information, this can lead to your insurance not paying in case of occupational disability. In addition, some policies offer dynamic premiums, where the premium and benefit are adjusted annually to account for inflation. This is a great benefit for your disability pension, should you ever need to receive it.

Health insurance

In Germany, it is a legal requirement that every resident of Germany has health insurance. This is regardless of age, health status and even nationality. If you are an employee, you have the advantage that your employer pays part of your statutory health insurance. In addition, the contribution to the health insurance is already deducted before your salary payment, so that you actually do not notice directly that you are paying for it. With a private health insurance (PKV) it looks different. You can only take out private health insurance if you have a certain income or if you are self-employed. The premiums in private health insurance depend on individual factors such as age, state of health and desired scope of services.

What does statutory health insurance cover?

The statutory health insurance covers standard services that are mandatory for all insured persons. These include medically necessary care, including medical treatment, hospitalization, medication and certain preventive examinations.

And what does private health insurance cover?

With private health insurance, the scope of benefits can be determined more individually. Here, for example, you can also receive benefits such as treatment by a chief physician, a single room in the hospital, alternative healing methods or comprehensive dental treatment.

For whom is the insurance suitable?

Everyone needs health insurance. Private health insurance is only suitable for high-earning employees with an annual gross income of 64,350 euros (as of 2021), the self-employed and freelancers, as well as civil servants and family members of privately insured persons.

What is the approximate cost of health insurance?

The costs for a statutory health insurance vary depending on your individual situation and your income. This is because contributions are calculated as a percentage of gross income of 14.6 (as of 2021), with employees and employers each paying half of the contribution. However, there is also an income threshold. This is 58,050 euros gross per year. In addition, each health insurance company can levy an additional contribution of up to 1.3 percent (as of 2021). The costs for a PKV also vary depending on various factors such as age, state of health, the selected tariff and the benefits that are included. Therefore, monthly costs can range from several hundred to a thousand euros.

What do I need to consider when taking out a policy?

When taking out statutory health insurance, you should consider the following aspects:

• Choosing a health insurance company: In Germany, there is a wide range of statutory health insurers. Even though they all have to provide certain standard benefits, additional benefits may differ. It can therefore be worthwhile for you to compare the health insurance companies with each other.
• Contribution level: The standard percentage rate is the same for every statutory health insurance company. However, the additional contributions vary from insurer to insurer. You should find out about this in advance.
• Service and accessibility: Another point you should consider is how good the services of the health insurance companies are. If you often need health support, a good customer service could make your life easier.
• Optional plans and supplemental insurance: Some insurers also offer you additional benefits if you take out supplemental insurance. If this is of interest to you, you can get information from the insurance companies.

Legal protection insurance

Whether legal protection insurance is important for you depends largely on how you work. Usually you are legally covered by your employer or the company is liable. But especially if you are a freelancer or entrepreneur in the IT sector, there are some situations in which a legal protection insurance can be very advantageous.

What does a legal protection insurance cover?

Legal expenses insurance is a type of insurance that covers the costs of legal disputes. This can include attorney fees, court costs, expert witness fees, and possibly the opposing attorney's fees if the policyholder loses the lawsuit.

Who is insurance suitable for?

In the IT sector, a wide variety of groups of people can benefit from legal protection insurance. Especially for freelance software developers and IT consultants, legal protection insurance is an important protection in case of possible contract disputes or unpaid invoices. Start-ups and companies in the IT sector should also find out about legal protection insurance. From contract issues to copyrights to potential employment law issues with employees, the appropriate insurance can help. It can also be beneficial for people who work as web designers and developers on a self-employed or freelance basis to take out legal protection insurance.

What is the approximate cost of legal protection insurance?

The cost of legal protection insurance varies depending on the type of legal protection insurance chosen and the scope of it. Some policies offer comprehensive protection in a variety of legal matters, while others offer more specific or limited coverage. Other policies also require you to pay a deductible. You must then pay a certain amount yourself if an insured event occurs.

What do I need to consider when taking out insurance?

If you want to take out legal protection insurance, you should consider a few points before signing the insurance policy. These include the coverage amount, the waiting period, the deductible, any exclusions included, cancellation periods and whether there is a free choice of attorney.

Retirement coverage

It never hurts to take out private insurance for your retirement. But self-employed IT professionals in particular need to take care of their retirement planning because they are not automatically subject to the same social protection systems as salaried employees. There is no statutory pension insurance obligation for the self-employed, and there is also no company pension scheme. But even as a salaried person in the IT sector, you should take care of additional coverage for old age, because your pension will probably not be at the same level as your previous income. Thus, you will not be able to maintain your current standard of living if you do not take proper precautions.

What does a pension plan secure?

With the appropriate pension plan you secure your well-being in retirement. During this time, you will no longer be gainfully employed, or only to a limited extent. For this reason, you need another "income" to cover your standard of living or at least your basic needs financially. Thus, the old-age provision is your income substitute.

Who is the retirement plan suitable for?

As a self-employed person in the IT sector, you have to take care of your old-age provision yourself. This is not optional, but obligatory. After all, if you want to stop working later on, you need a retirement plan that replaces your income. Even salaried employees should make an effort to set up a private pension plan. Relying solely on the state pension can be risky, as it may not be enough to maintain the standard of living you want or need in retirement.

Approximately how much does a retirement plan cost?

It's hard to say what a retirement plan will cost you each month. The cost depends on how much you want to earn in retirement, your financial resources, your current situation and the type of retirement plan you choose. You also need to consider that some retirement plans also have a fee associated with them and how long you want to "save" for your retirement plan.

What do I need to consider when taking out a pension?

It makes sense to calculate in advance how much you will need each month in retirement. In doing so, you should consider your current living situation and also plan for how high other expenses might be in the future, such as costs for travel, hobbies or health care. In addition, an early start is recommended. The earlier you start saving for retirement, the more you can benefit from the compound interest effect and the lower the necessary monthly or annual contributions. Also, you should not invest your money in just one retirement product or asset class in order to spread risks and optimize return opportunities. Find out about fees, check providers and see how flexible adjustments are possible.

Contents insurance

Contents insurance is suitable for covering all items located in a house or apartment that are not permanently attached to the building. Contents insurance protects against various risks such as fire, burglary, storms and vandalism. Contents insurance may be considered if you own expensive items such as a computer, server and more.

What does contents insurance cover?

Contents insurance (often called homeowner's insurance) protects the contents of a house or apartment against various perils. Fire is one peril, this includes damage from fire, lightning or explosion. Likewise, contents insurance can take effect in the event of burglary . It then protects from the damage or loss caused by burglary or robbery. In addition, it also often covers damage caused by water leaking from pipes or equipment, storms or hail, and destruction of or damage to property due to vandalism.

IT professionals often have expensive equipment such as computers, servers, monitors and peripherals. These can be protected by content insurance. While physical copies of software or media may be covered by insurance, it is important to clarify whether licenses or electronic versions of software are also protected and to what extent. Content insurance may cover the physical location of data (e.g., hard drives or external drives), but not necessarily the data content itself. Additional services or insurance might be required to recover data.

If you work from home, it's important to clarify the extent to which business equipment and data in the home office are protected by content insurance. Some contents insurance policies also provide business interruption protection. This means that if a covered loss temporarily stops business, the insurance company can pay for lost profits and additional costs.

Who is the insurance suitable for?

Contents insurance is suitable for a wide range of people and situations. In general, it can be useful for anyone who owns valuables or personal possessions that they want to protect from loss or damage. Every household, renter, homeowner, freelancer or self-employed person has some amount of valuables, whether furniture, electronics, clothing, jewelry or art. Insurance provides protection against unexpected losses due to fire, theft or other damaging events.

Everyone should evaluate for themselves whether their individual items have a particular financial value that needs to be protected. One's own needs and circumstances must also be considered.

While contents insurance can be beneficial to many people, each individual should evaluate his or her individual needs and circumstances. It is important to carefully read the policy terms and conditions, properly evaluate the amount of coverage, and ensure that the policy chosen provides the protection desired.

What is the approximate cost of contents insurance?

The cost of contents insurance is variable. For example, they also depend on the region. In cities or regions with higher burglary rates, the cost may also be higher. The total cost also depends on the total value of the household contents. Additional protection options, such as protection against natural disasters, glass breakage or bicycle theft can also increase costs. A higher deductible can reduce the premium, but it also means you'll pay more out of pocket in the event of a claim.

What is there to consider when signing up?

If you decide to sign up for contents insurance, your first step should be to estimate the total value of your household contents to determine the amount of coverage you should take out. You should also see which perils are covered. Sometimes additional perils such as flood, earthquake or snow pressure can be covered. Some plans also offer a reduced premium if you are willing to pay a certain amount yourself in the event of a claim. It's also recommended that you review and adjust your coverage periodically (e.g., annually), especially if your circumstances or the value of your household goods changes.

Cyber insurance

Cyber insurance is insurance that covers businesses or individuals against financial losses that may result from cyber events such as data breaches, cyber attacks, malware, ransomware, and other internet-related risks. This insurance can also cover loss or damage to electronic data, extortion, and business interruption due to cyber events.

What exactly does cyber insurance cover?

Cyber insurance aims to protect against all risks related to the use of information technology. What exactly a cyber insurance policy includes depends on the provider and the particular insurance policy. Often included is coverage for costs incurred when sensitive data is lost or stolen, costs incurred in recovering data and systems after a cyberattack, and costs incurred when operations must be interrupted due to the attack. In addition, legal costs may also be incurred or contractual penalties may apply. These are also included in some cyber insurance policies.

For whom is the insurance suitable?

Cyber risks are cross-sectoral. Therefore, cyber insurance is also suitable for a wide range of professions. From online retailers and healthcare providers to, of course, IT service providers and consultants. After all, a lot of data is worked with in the field of information technology. A cyber attack can result in high costs.

What is the approximate cost of cyber insurance?

Often, the cost of cyber insurance starts at just a few euros per month.

However, the exact cost of cyber insurance always depends on several factors. A business owner who handles sensitive data such as financial or health information might pay higher premiums than a person who does not handle such data. The size and annual revenue of the business are also factors in how much it will cost. A lower deductible can result in higher premiums for some insurance policies, and previous security incidents can as well.

What is there to consider when purchasing cyber insurance?

If you're an IT consultant taking out cyber insurance, there are some specific points you should consider:

 

• Check coverage: Make sure the policy covers the specific risks you face as an IT consultant, such as claims for negligent consulting, faulty implementation of security systems or loss of data at a client site.
• Professional liability insurance: Ideally, you should combine cyber insurance with professional liability insurance that covers damages caused by professional negligence.
• Consider retroactive dates: Some policies provide coverage for incidents that occurred before you purchased the insurance but are discovered later. This can be important to you, as IT problems sometimes take a while to become apparent.
• Contract review: If you have contractual obligations to your clients, make sure your insurance policy reflects those obligations.
• Deductibles: Consider the amount you could and would like to pay yourself in the event of a claim. A higher deductible may reduce the premium, but you should be sure you can afford the amount if needed.
• Third-party coverage: If you rely on third-party providers for your services, your policy should also cover incidents caused by those third-party providers.
• Extensions and Exclusions: Read the fine print and look for exclusions or limitations that may be relevant to your work.
• Training and compliance: Some insurers may offer reduced premiums if you attend regular training or have certain certifications.
• Worldwide coverage: If you work internationally or have clients overseas, you may need a policy that offers worldwide protection.
• Renew and adapt: The IT and cybersecurity world is constantly evolving. Review and update your insurance regularly.

 

Liability insurance for IT professionals

Liability insurance protects you from third-party financial claims resulting from unintentional damage for which you end up being held liable. Liability insurance for IT workers is specifically about the financial claims that arise due to errors or omissions on the job.

What does liability insurance cover?

The IT industry poses specific risks that are often not covered by standard liability insurance. That's why liability insurance specifically for the IT sector can provide security in everyday working life. Risks and areas that are usually covered include professional malpractice such as a programming error that leads to outages and data loss, a breach of contractual duty, a data protection breach, an infringement of intellectual property rights and copyrights, operational and production downtime and delays, and much more. Exactly what IT liability covers varies from policy to policy.

For whom is the insurance suitable?

IT liability insurance is suitable for many professional groups in the IT industry. IT liability is particularly useful for software developers, IT consultants, network engineers, administrators, system integrators, web designers, web developers, database administrators, IT service and support technicians, and cloud service providers.

It's important to emphasize that although many IT professionals believe they don't need their own liability insurance because they work under the umbrella of a larger company, the risk of personal liability still exists. An individual policy can also provide additional protection in these situations.

What is the approximate cost of liability insurance for IT professionals?

Liability insurance for IT professionals does not have to be expensive. The cost depends on the size of the company or whether the person is a sole proprietor or not. It also depends on the type of activity, the turnover and the selected coverage amount. Other factors include the amount of the deductible and additional coverage options such as pecuniary loss liability and cyber insurance.

What is there to consider when taking out a policy?

There are a few aspects you should be aware of before taking out a policy. For example, the amount of insurance you choose should be high enough to cover potential claims. Consider how high the sums could be in the event of a claim. You should also consider how far the insurance cover extends. Does the coverage apply only in Germany or throughout Europe? You should also study the details of the policy, as there may be some exclusions that are not covered by default, as well as an excess that applies in the event of a claim.

Professional liability insurance

Liability insurance for IT professionals is also professional liability insurance. However, professional liability is the umbrella term for all insurance policies that cover professional risks. It ensures that insured persons are protected against claims against third parties. However, the exact scope and specific conditions may vary depending on the profession and the insurance policy. For example, there are professional liability insurance policies for architects, tax consultants, journalists, experts, real estate agents, doctors and more.

Business liability insurance

In addition to professional liability, another form of liability insurance is business liability insurance. Public liability is geared towards businesses and protects them from third-party claims arising from personal injury, property damage or financial loss.

What does public liability insurance cover?

With public liability insurance, you can cover any damage that occurs to a person in your business. For example, if a customer is injured in a meeting on the business premises. In addition, the business liability insurance also covers property damage to third parties. This can be the case, for example, if an employee damages something at a customer's premises. In addition, financial losses are also covered, which can occur at your IT company, for example, due to incorrect advice or a system failure.

Who is the insurance suitable for?

As discussed earlier, software developers, IT consultants, system administrators who work in an IT company are exposed to potential liability risks that can range from data loss to incorrect advice. So if you have an IT company, you should definitely look into business liability insurance.

What is the approximate cost of business liability insurance?

The cost of business liability insurance depends on a number of factors such as:

 

• Industry and profession: some professions and industries have a higher risk profile than others. For example, a contractor will likely pay more for insurance than a graphic designer because the potential risks of loss are higher in the construction industry.
• Company size and revenue: a larger company with more employees and higher revenue will typically have higher premiums than a small sole proprietorship.
• Deductible: As with other insurance policies, the amount of the deductible can affect the amount of the premium. A higher deductible will usually result in lower premiums.
• Sum Insured: The maximum amount the insurance company will pay out in the event of a claim also affects the premium. Higher coverage usually results in higher costs.
• Contractual details and additional coverages: Special agreements, additional insurance or specific coverage extensions can affect the price.
• Previous claims: companies that have had many claims in the past could experience higher premiums.
• Location of the business: Sometimes regional factors or the exact location of the business can affect the cost.

 

What is there to consider when signing up?

It's important to thoroughly research your coverage before purchasing business liability insurance. Compare different offers, pay attention to the sum insured and any exclusions. You should also look at extensions and possible additional insurances as well as the term and cancellation periods.

Liability insurance for pecuniary loss

What does pecuniary loss liability insurance cover?

As with all types of insurance, the exact scope of pecuniary loss liability depends on the insurance company and the individual insurance policy. As a rule, pecuniary losses are covered that arise from faulty advice, a failure to meet deadlines, faulty service, breaches of contract and the loss of data or documents. In addition to the actual settlement of claims, pecuniary loss liability often also covers the investigation of claims for damages and, if necessary, the costs of legal defense against unjustified claims.

For whom is the insurance suitable?

The pecuniary loss liability insurance is particularly important for freelance professions such as tax consultants, lawyers, notaries, auditors, management consultants and IT service providers, as they are often exposed to an increased risk of pecuniary loss in the course of their professional activities.

What is the approximate cost of pecuniary loss liability insurance?

The cost of pecuniary loss liability insurance depends on various factors. For example, the exact professional activity is decisive, as well as the amount of coverage and the deductible. Other aspects that make a difference in the premium amount are the turnover, the size of the company and whether there have been previous claims.

What do I need to consider when taking out an insurance policy?

When taking out a policy, think carefully about the insurance cover you need and the level of cover. You should also read the terms and conditions of the contract in detail to identify any exclusions or limitations. Some policies include a deductible in the event of a claim. This can lower the premium, but it also means that you have to pay part of the costs yourself in the event of a claim. Retroactive coverage can be especially important for professions where the consequences of a mistake don't become apparent until years later. It protects you from claims for activities that you performed before the contract began. On the other hand, you should also pay attention to how long the insurance company will continue to cover claims arising from past activities after the end of the contract.

Personal liability insurance

An IT professional, like any other person, should have personal liability insurance, as this protects against the financial consequences of damage that you unintentionally cause to third parties in your private life. In this context, the choice of profession does not actually play a decisive role. However, personal liability insurance is definitely one of the most important insurances that IT professionals should have.

What does private liability insurance cover?

Unintentional damage caused by you or a co-insured person in your private environment. This typically includes, for example, personal injury, property damage and sometimes also financial loss. Personal injury involves injuries or impairments to a person caused by your fault or the fault of a co-insured person and are therefore protected. It often also covers costs incurred in defending against unjustified claims, as well as damage to rented property, i.e. damage caused to rented living quarters.

For whom is the insurance suitable?

In principle, everyone should have a personal liability insurance, because it can always happen that accidental damage occurs. From single adults to families with children. But also households with animals, athletes, people who travel often and seniors should take care of a personal liability insurance.

What is the approximate cost of personal liability insurance for policyholders?

A personal liability insurance can start with annual premiums of about 40 to 70 euros. Of course, the costs are very individual and vary depending on which provider, which coverage amount and deductible, which additional benefits, etc. you choose. If you choose a family tariff, this is also somewhat more expensive.

What do I have to consider when taking out a policy?

You should look at the following aspects when taking out personal liability insurance:

• The amount of the deductible
• The desired sum insured
• The scope of benefits
• Term and notice periods
• Discounts and special conditions
• The possibility to make adjustments as well as extensions at a later date

 

Our conclusion to your IT insurance

In the end, it's up to you to decide which insurance you want to take out and which insurance you can do without. Except for health insurance, as an IT professional you have no obligation to take out and pay for any other insurance. Here, your own sense of security, financial reserves and perhaps also the family environment are factors that can decide what kind of protection you create for yourself in your life.