llc, insuranceI recently formed a one-person consulting LLC and have done a few jobs for some companies. I currently have general business insurance but not errors and omissions. A recent job requested proof of this type of insurance and I am unclear as to the practicality of this type of policy. As I understand it, it protects me if I overlook something during my work. In my SOW I agree to return visits if I fail to meet the requirements of the employer. Is an employer still likely to sue you, requiring this type of policy in the event you return to correct all problems?
Is an employer still likely to sue you, requiring this type of policy in the event you return to correct all problems?
Unlikely. At least, in the UK (and I imagine it’s the same in the US), any such claim would be for damages (whether contractual or tortious): “in the event you return to correct all problems”, there would be minimal damage and therefore little prospect of a successful claim.
The requirement for such an insurance policy is to provide the client with comfort against the possibility that you do not (or cannot) return to correct the problems.
In the US, I do not think this is a useful insurance. I used to have it years ago but stopped it and have not regretted it as we have grown. Clients/Vendors care much more about your overall level of insurance ($2mm typically for a small tech company) in your aggregate General Liability. At times larger companies will ask us if we have it in their agreements, but when we push back and say we don’t, they always allow us to take the requirement out of the agreement.
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