Commenting, Alan Thomas, technology risks and insurance expert at Hiscox, said: "Breach of contract is the most common cause of professional indemnity claims we see when it comes to the technology sector. Very often this is down to poorly worded contracts which can lead to misunderstandings between suppliers and their clients. Smaller businesses can also often feel pressured into signing customers' contracts or terms and conditions without feeling able to challenge or even review specific clauses."

To help tech companies and IT professionals improve their understanding of the common pitfalls when it comes to drafting contracts, Hiscox has developed a booklet called Contracting hints and tips which can be downloaded from www.hiscox.co.uk. Ithas been put together with leading law firm DLA Piper, is written in simple, easy to understand English and deals with a range of contract issues including;

understanding what forms part of a contract

ensuring the full extent of responsibilities due under a contract are fully laid out

the differences between a warranty and an indemnity

how to prepare if a dispute arises.

Alan Thomas adds:

"One of the most effective ways to reduce the chance of a claim being made, which in turn reduces the chance of expensive litigation and, as importantly, a breakdown in relationships, is to ensure that contracts drafted at the outset lay out clear responsibilities and that there is an agreed process if mediation is required . Our booklet has been designed specifically to help those in the technology sector understand the common pitfalls when it comes to drafting contracts and how best to avoid future claims."

Other risks that technology companies face include intellectual property claims, for example accidentally breaching someone else's copyright, and theft of high value equipment from offices or data centres.

Contracting hints and tips can be downloaded at http://www.hiscox.co.uk/business-insurance/tips-and-information/contracts/. Hear about a recent Hiscox technology breach of contract claim at: http://www.hiscox.com/about-hiscox/hiscox-in-action.aspx