Freelance liability insurance is making my head hurt.

June 23, 2008 5:52 PM

I'm a small freelance business owner, with a new client whose standard contract requires me to carry general liability insurance. Probably not a bad idea, so I could use some tips for what to look for in this type of insurance, and any good carriers. But in the meanwhile, for this specific contract, I'd like to get that clause waived. Has anyone had any success having a clause like this waived, and how did you do it?

I run a small copy-editing business part-time. Liability insurance hasn't been an issue up until now. Clients aren't on my property, I'm not on theirs, no one's traveling anywhere, they make all final decisions on whether to accept my suggestions...it just hasn't been a high priority and no one's asked about it before. But my new client is so happy with the job I just did that he wants to get me signed up as a contractor at his university so he can hire me again. Which is great, but there's this boilerplate language in the contract about how I need to carry all sorts of insurance - the general liability, plus workers' comp, employer's liability, and automobile liability.

Ultimately, if I can afford it, it's probably not a bad idea to have this sort of insurance. I'd like to start looking into it, and would gladly accept suggestions for companies that might have a reasonably-priced insurance policy for this sort of business. (I've looked around a little so far and the policies I'm finding seem to assume full-time employees, property, and 6-figure revenues, which is all way out of my league right now.)

In the short-term, I'd like to get paid for the job I've already done (which was originally supposed to be a one-off and thus not require all of this), and have time to look around for good insurance rather than jumping into the first thing I find just so I can satisfy this contract. A little Googling led me to some stories of editors who were able to have clauses like this waived after pointing out they don't really apply to businesses like mine. I'd like to try that tack and am looking for advice on how to proceed. Has anyone successfully had something like this waived in a contract? If so, what arguments were persuasive?

posted by Stacey to work & money (6 comments total)

I had this problem as well starting up my own shop. I work from home as well, so I managed to talk one of my clients into dropping an insurance requirement. It just made sense all around - they didn't want to deal with checking on compliance and it was as simple as striking out a section of their standard contract.

If you can't talk them out of it, you're probably going to have an easy time getting a basic business owners policy. You don't drive around tankers full of chlorine gas, after all. Just call a couple of insurance agents around town and explain your business. You're exactly right about saying that you will rarely be on their property and they will never be on yours. All the agents I talked to were great about trying to get the best deal possible - Nationwide was particularly great in my experience. A low liability policy for a business like yours is probably going to run around $550 a year. Business auto is quite a bit more than that and depends a lot more on your car. Best of luck!
posted by cr_joe at 6:33 PM on June 23, 2008

If you're working out of your house, could you deal with it by getting an umbrella policy? That's a good thing to have anyway, and maybe its a two-birds-one-stone sort of thing. Worth asking about, I would think.
posted by spilon at 7:24 PM on June 23, 2008

We had to have professional indemnity and general liability insurance in dealing with a large corporate client We passed the cost on.

Either try to get them to drop it or tell them that you'll need to pass the cost onto them
posted by mattoxic at 7:51 PM on June 23, 2008

When I was starting my first business I just made good with a local insurance agent, who I golfed with sometimes anyway.

He helped me find some reasonably priced liability policies, which fortunately turned out to be very inexpensive, even for large-ish ($10m) limits.

I feel like a bit of a jerk saying "talk to an insurance agent" but that worked a lot better for me than trying to do it all over the Internet did, and it also allowed me to walk through the various sorts of coverages, get a professional explanation of what they do, and get pricing on them.
posted by Project F at 10:23 PM on June 23, 2008

I've carried this kind of policy for many years because of my job as a photographer working primarily on location. Up until this year, I've only been asked about twice to provide a certificate of insurance to specific clients prior to accepting an assignment.

Within the last six months I've had to provide two more, and also had to provide proof of insurance for one additional client.

My insurance agent told me to get used to it, because although all insurance companies want to sell business liability policies and all client companies need them, no company wants their own insurance agency to have to actually have to make good on a claim.

Therefore, the whole thing filters down the food chain to the bottom rungs, with the little guy having to pretty much indemnify everybody else on up the line.

I think the process stinks, but such is life.

If memory serves me correctly I'm paying somewhere around $350 annually for two million in liability coverage as well as substantially lesser coverage for theft, damage, etc.
posted by imjustsaying at 1:16 AM on June 24, 2008

Thanks, all. Just a little follow-up: I was able to get hold of the client, and he talked to his contact in accounting, who says the clause doesn't apply to people who don't physically work at their offices. I'm going to get that in writing to be safe, but I'm definitely glad now that I asked.

Sounds like I might run into this again and probably should start looking around for some insurance, but I'm glad to not have to do it in a rush, and will follow up on some of these suggestions for where to look.
posted by Stacey at 5:48 PM on June 24, 2008