What's the simplest way I can fill this requirement?

June 6, 2011 8:59 PM

I completed a web project for a California institution and am being paid as an independent contractor. On a form I must fill out is the following question:

"Do you have liability insurance? If yes, attach a copy of current policy or insurance certificate. If self insured attach a copy of most recent financial statement."

1. What financial statement do I need to demonstrate I am self-insured? Because if I can do so without jumping through a lot of hoops, that would be nice.

2. Failing that, is there a cheap, no hassle way to purchase liability insurance as a web design type independent contractor? That I can do tomorrow, get what I need, and forget about it until this time next year? Perhaps even online without having to go into an insurance office in person?

posted by jsturgill to work & money (8 answers total)

If you've already completed the project its possible any liability insurance you buy now wouldn't cover you.
posted by missmagenta at 9:01 PM on June 6, 2011

By "financial statement" they probably mean a Profit & Loss and/or a Balance Sheet. But it seems like the form is intended for a larger outfit than you.

My guess is that you could be in the following situation: the person that hired you didn't give a shit about forms and protocol. Now, to process your payment, the accounting dept is going to ask you to fill out the forms and follow protocol.

If you've already done the work, then they're probably going to have to pay you, even if you were supposed to have insurance and didn't.

You could just leave the question blank...that way if they REALLY need to know about your insurance they'll come back and ask you. Hopefully you'd then hear from someone who can give you some guidance about what they actually need. Or you could check "No" but don't attach anything, since you're not really self-insured either.

It should be easy to purchase liability insurance, but it might take a few days. If you need the name of a business insurance agent in California, drop me a line and I can put you in touch with someone.
posted by quinoa at 9:27 PM on June 6, 2011

I work for a government agency, and anecdotally, I do know of circumstances where contractors did not get paid for work they had already done because it turned out they did not meet the necessary requirements for performing work in our jurisdiction. I also know of someone who sort of mistakenly checked the wrong box in a qualifications form because it was what they thought would somehow make things slide by easier, and instead they ended up having to defend themselves against a perjury charge.

Things could be different if the work you did was for a non-governmental agency, but bottom line: just don't lie. I don't know about lying by omission, but definitely take the "tell the truth" part of whatever you are signing seriously.
posted by gubenuj at 9:46 PM on June 6, 2011

IAAL, but IANYL. TINLA.

One of the hallmarks of a true independent contractor (as opposed to an employee that the employer is trying to avoid paying proper taxes on) is that the contractor carries his own liability insurance. Other indicators are the maintenance of a separate work address and providing services for other entities, also on an independent-contractor basis.

Since you've already performed the work, it's obviously irrelevant whether you have insurance -- except for the employer to establish that you really are an independent contractor. You might inquire whether that's the case. If so, they might be satisfied with other evidence of your contractorhood. For example, you could give them a list of other clients for whom you performed work in the past three months, or something like that.
posted by spacewrench at 9:53 PM on June 6, 2011

Helpful answers! I've sent an e-mail to the person handling the paperwork, and I'll see what they need me to do.
posted by jsturgill at 9:58 PM on June 6, 2011

You should reread the contract you signed before beginning work to make sure that it didn't have you promise to carry liability or self insurance up to a certain amount.
posted by salvia at 10:02 PM on June 6, 2011

The contracts I've seen for websites at a quasi government institution generally required both insurance and financial statements. Basically, what people submitted was a letter from the insurer stating their insurance, and a letter from their accountant certifying an accompanying balance sheet is accurate and conforms to accounting principles.

One interesting accountant certified the balance sheet was _not_ certified, which I found interesting. I wasn't in on the procurement process so I can't say whether that outright invalidated the bid or what, but I'm sure there's a story behind that letter I'll never know.

I'm no lawyer, but I'm with spacewrench on this. If your client really wanted this, they would have checked before now.
posted by pwnguin at 4:02 PM on June 7, 2011

Quick update: "No, I don't have any" was an acceptable answer.
posted by jsturgill at 6:05 PM on June 8, 2011