Commercial Liability Insurance, and E & O

[Chadwick Wood]

Hi all,

I'm a web developer, and a prospective client (large organization) has sent me their standard contract, and in it they require contractors they work with to carry Commercial General Liability Insurance as well as Errors & Omission insurance. Have any of you run into this before? This is my first time in 5+ years of doing this work. Does anyone have any info about it? I'm not sure whether to push back on having that requirement dismissed (not likely), or if I do buy it, how to go about shopping for it.

Thanks!
Chadwick Wood
http://coffeeshopped.com/

[Paul Menard]

Chadwick,

Disclaimer: you should probably consult an attorney or someone familiar with contracts. 

I've been a self-employeed developer for hire since 2006 and just was looking into liability insurance this Spring. Mainly because I was getting into larger and larger projects. And those clients are very strict on timelines and budget. You can just do a google search for 'Professional Liability Insurance' and find all sorts of underwriters. The purpose of you having insurance is to limit your liability should you be sued. 

I think it is strange that your client as telling you that you have to have liability insurance in order to be a contractor for them. If this is an agency who works with their own clients then they might have something else in the contract to the effect that they are not responsible for your actions regarding their client. Sort of a way to pre-exclude themselves from damages should their client sue them. So they are basically saying you will take the heat if something goes wrong. 

Again, I would seek out someone to review the full contract like an attorney. And or just pass on the client unless they are really lucrative. 

P-

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[Bill Erickson]

I've only had two clients that had it in their contracts - both universities. It was their standard contractor agreement, and after I told them I'm not buying insurance specifically for this project, they removed it from the contract.


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Bill Erickson
WordPress Consultant

http://www.billerickson.net

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[Rebecca...@insperity.com]

Chad,

I have definitely heard of this going on. Feel free to give me a call and I will explain where I think this is coming from. I am also noticing a trend in contracting language that requires independent contractors to carry workers compensation. I see it more with my east coast (DC) client's but I'm starting to see it in Austin as well. I refer my clients to Lockton Infinity Group. Let me know if you would like me to have them reach out to you or if you would like their contact information.

Rebecca Stewart
Business Performance Advisor

   

9600 North Mopac Expressway | Suite 200 | Austin, TX 78759
OFFICE: 512-231-4514 | MOBILE: 240-328-3332 | FAX: 866-367-7315

[Chadwick Wood]

Thanks Paul,

I'm actually working directly with the client, not with a firm. It's my assumption that the client requires the insurance so that, in case I really messing something up, there's some money potential in a lawsuit beyond my company assets (which feels like a weird foot to get off on with a new client, but I guess that's how the big guns do it?).

Thanks,
Chadwick

[Stu Smith]

Hey Man,

I'm not a legal expert but in the past when there have been insurance requirements in a standard contract it typically only applied to work done by contractors on site. I'd just politely ask them if those insurance reqs apply to you as an offsite contractor.

Stu Smith

Creative Director

www.sputnikcreative.com

@sputnikco

[Jan Triplett]

Pretty standard with government stuff. 

Earlier suggestion to see if this is just a "boilerplate" issue is a good one. I have seen clients back off from this. It's not so strange when you consider the potential risk if they are not the end user. No one wants to see their name in print with no recourse if things go south.

I also agree, talk to a lawyer. You should have one review the contract anyway. My go to contracts person is attorney Jeanine Lehman. Jeanine Lehman <jea...@jeanine.com> She certainly does a great "translation" job as well as a great job looking after the interests of her clients.

Here's to your success!

Jan F. Triplett, PhD., CEO

Business Success Center 

Sales & Financial Business Management Advisors & Strategists

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512.933.1983

[Ryan Crumley]

I have run into this before with public companies. I'd try pushing back just to see if the insurance requirement is firm. A lot of times the client doesn't care especially if your project duration is short, you are offsite, etc. I've had the insurance amount reduced or removed all together. 

If I recall correctly General/Umbrella insurance is fairly cheap, about $1000 a year for $1m in coverage… E&O can be pricey!

Ryan

[Prashant Sheth]

I use hiscox.  They've had good service fairly reasonable n great coverage

Regards,

Prashant 

512.917.2308

- sent from my iPhone  please excuse the brevity

On Jul 19, 2012, at 1:05 PM, coderDx <dave.b...@gmail.com> wrote:

This is great stuff, thanks everybody. I just became a full-time freelance web developer in January. Previous to that, I have had my own computer repair business since 2006, but that is part-time. The possibility of liability issues is always in the back of my head, and sometimes, floats to the front. This is all very good food for thought. 

One of the things I am working on now is organizing my web development business into an LLC, to provide additional protection against liability. I am involved with a new meetup group here in Milwaukee called Biz Camp. The group started with a discussion of liability issues, and helping new businesses get better organized legally to provide increased protection from liability. Each week, we all receive an individual business-related assignment to complete.

An aside, my assignment for the group here is to look into creating my LLC in Texas, as I am moving there next summer!

Thanks again,

Dave Brixius

KerBob Interactive Web Solutions

www.kerbob.com

[Jonathan Cran]

I can vouch for the service of hiscox as well. Painless (<30min) to set up an online account, basically just consists of answering a few questions about the business, and a followup call a few days later. 

jcran

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Jonathan Cran
jc...@pentestify.com
515.890.0070

[Lance Vaughn]

We use Hiscox at CabForward, too. $2M in coverage is enough for most clients.

-- 

Thanks,

Lance Vaughn

CabForward Founder/CEO

512-751-7201

http://cabforward.com

http://about.me/lancevaughn

Agile Web and Mobile Development with Ruby on Rails and iOS

Lean Customer Development for Startups

Austin's Engine Yard Training and Development Partner

Catch me on Skype, username 'austinrails'

Sent from my iPad