IT Insurance Costs

You may not know this, but a majority of our clients happen to be in the IT consulting industry. We are often asked what type of insurance a typical IT consulting company would need, so we came up with a fictional company, to show you the insurance that you would likely need and typical premiums for this coverage.

Howard Consulting, Manalapan, NJ 07726
Owner works from home and placed 4 consultants at client sites in New Jersey.

• 5 employees including one sole proprietor
• $1,000,000 estimated revenue for year 2010

First of all, you will need general liability insurance.  General liability insurance covers liability claims of bodily injury, other physical injury or property damage. This means you are covered for accidents at your business or at your clients’ place of business. It also covers the cost to defend or settle claims whether they are fraudulent or not.

General Liability Insurance

• $1,000,000 liability per occurrence
• $2,000,000 liability aggregate
• $10,000 medical claims
• $1,000,000 hired and non owned auto
• $10,000 business property

Estimated annual premium:
$350-$750
*liability only would be $350

Umbrella insurance extends your coverage beyond the limits of your basic business insurance.  Also referred to as excess liability insurance, umbrella insurance is important because it covers unexpected events.  It’s generally not expensive and in certain instances, it could literally save your business.

Umbrella liability
$1,000,000 per occurrence

Estimated annual premium:
$400

Workers compensation insurance coverage represents a compromise between employers and employees regarding employment related injuries or illnesses.  Here’s how workers compensation works:
Your employees relinquish their right to sue you if they suffer an on-the-job injury or illness.  In return, you, the employer, agree to provide state-mandated benefits as a result of that on-the-job injury or illness.

Workers compensation insurance
$1,000,000 bodily injury

Average rate across U.S. with fees is .27-.35 per $100 of payroll
Estimated annual premium based on $360,000 of payroll
$972-$1260

Professional liability insurance is appropriate for any information technology company that provides advice, makes educated recommendations, designs solutions or represents the needs of others and protects your company from errors or omissions that damage your clients.

Professional liability

• $1,000,000 per occurrence

Typical annual premium:
$750-1250

A fidelity bond covers against loss due to employee dishonesty.

Fidelity bond

• $1,000,000 coverage

Typical annual premium:
$1,250-$1,750

Health insurance provides re-reimbursement for illness and provides preventive care.

Health insurance
Small group health insurance in New Jersey is based on the census of your employees and where your office is located. The average age, gender makeup, and the coverage status of your employees all factor into the price.

Here is the information used for this sample quote.

07726, effective date of 8/1

Census:

• Employee 1-male-family-32 years old
• Employee 2-female-single-40 years old
• Employee 3- male-parent/child-35 years old
• Employee 4-male-single-26 years old
• Employee 5-female-family-45 years old

Health Insurance quotes:

1. Aetna HSA compatible HMO, deductible funded under 50%
$1650/$3300 deductibles

• Office co-pay is $20 after the deductible
• Specialist co-pay is $40 after the deductible
• Hospital in-patient is $300/day for 5 day maximum after the deductible
• RX benefit is 15/35/60

Monthly cost is $2,961

2. Amerihealth Cost Sharing HMO

• $1000/$2000 deductible
• 70% co-insurance
• Office co-pay is $20
• Specialist co-pay is $40
• Hospital in-patient is 70% after deductible
• RX Benefit is 7/50% $125max/rx

Monthly cost is $3441.47

3. Horizon BCBS of NJ HMO

• Office co-pay is $20
• Specialist co-pay is $40
• Hospital in-patient is $250/day for a 5 day max per admission
• RX benefit is 10/25/50

Monthly cost is $4401.90