What happens if I don't have insurance?

CJ · Guest

I'm a computer consultant, and I work independently on a contract
basis. I received a phone message today from one of my main clients.
They are having an audit, and want me to fax them proof of my coverage
for professional liability or workman's compensation. The thing is, I
have neither (maybe I should, but I don't). I reviewed my contract
with them, and it says nothing about me being obligated to obtain such
insurance. The only clause related to liability reads:

11. LIMITATION OF LIABILITY. NEITHER PARTY SHALL NOT BE LIABLE FOR ANY
SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY KIND
ARISING FROM OR IN CONNECTION WITH THIS AGREEMENT, EVEN IF INFORMED IN
ADVANCE OF THE POSSIBILITY OF SUCH DAMAGES. EACH PARTY'S MAXIMUM
AGGREGATE LIABILITY ARISING FROM OR RELATED TO THIS AGREEMENT SHALL BE
LIMITED TO DIRECT DAMAGES UP TO THE AMOUNT OF COMPENSATION PAID AND
OWING TO CONSULTANT UNDER THE APPLICABLE WORK ORDER AS OF THE EARLIEST
DATE ON WHICH THE EVENTS GIVING RISE TO THE LIABILITY OCCURRED.

I assume this has to do with damages resulting to the company from poor
work, as opposed to injury-on-the-job type issues. In any event,
before I call them and tell them I have not had any such coverage, I'm
thinking of speaking to an attorney first. But I thought I'd also
check with the "experts" in Internet land -- can I be in any legal
trouble, either criminal or civil, because I have not carried the kind
of coverage that the auditor is asking for?

CJ

John A. Weeks III · Guest

"CJ" <charlesjones456@yahoo.com> wrote:
Quote: I'm a computer consultant, and I work independently on a contract
basis. I received a phone message today from one of my main clients.
They are having an audit, and want me to fax them proof of my coverage
for professional liability or workman's compensation. The thing is, I
have neither (maybe I should, but I don't). I reviewed my contract
with them, and it says nothing about me being obligated to obtain such
insurance. The only clause related to liability reads:

You need to spend an hour of time visiting your attorney.
You need to find out if your contract requires you to have
insurance. The language that you quoted might imply that.

If you do need insurance, you will want to get it, or risk
facing losing the contract. If the contract does not require
you to have insurance, it is still a good idea to do so
in the event of something bad happening, like someone
trips over your briefcase or you knock over a lamp and
burn their building down. But if you are not required, and
don't want to get it, then a letter from your attorney
stating that might clarify things for your contract. Your
customer might simply be assuming that you have insurance
regardless of what your contract states.

-john-

--
======================================================================
John A. Weeks III 952-432-2708 john@johnweeks.com
Newave Communications http://www.johnweeks.com
======================================================================

frank20 · Guest

"CJ" <charlesjones456@yahoo.com> wrote:
Quote: I'm a computer consultant, and I work independently on a contract
basis. I received a phone message today from one of my main clients.
They are having an audit, and want me to fax them proof of my coverage
for professional liability or workman's compensation. The thing is, I
have neither (maybe I should, but I don't). I reviewed my contract
with them, and it says nothing about me being obligated to obtain such
insurance.

While it certainly is a good idea for a consultant to carry business
liability insurance, it is not required, per se. Some organizations, such as
government affiliated, require proof of insurance prior to signing any
contract for work.

Here, it is not clear what has transpired or is expected. Maybe their
contract office requires supplier to carry it...and whoever contracted with
you didn't know that or forgot about the requirement. Maybe there is no
'requirement', and auditor is simply asking questions off a checklist or,
perhaps, because they want to make a point about a deficiency in this area
to your client.

While I am not sure it is time to go to an attorney, it is time to make a
decision about liability insurance...are you going to have it or not? If
'yes', run get it and provide the 'proof' you got it to client for his
auditor; if 'no', tell the truth to client.

If 'no', and telling client leads to nothing more..so be it. If telling
client uncovers problem (No insurance, no contract)...THEN is the time to go
to attorney...since you were not informed, there may be things you can do at
that point.

Best,
Frank J. Hannaford

George King · Guest

"CJ" <charlesjones456@yahoo.com> wrote in message
news:11ca1s37155pta6@news.supernews.com...
Quote:
I'm a computer consultant, and I work independently on a contract
basis. I received a phone message today from one of my main clients.
They are having an audit, and want me to fax them proof of my coverage
for professional liability or workman's compensation. The thing is, I
have neither (maybe I should, but I don't). I reviewed my contract
with them, and it says nothing about me being obligated to obtain such
insurance. The only clause related to liability reads:

11. LIMITATION OF LIABILITY. NEITHER PARTY SHALL NOT BE LIABLE FOR ANY
SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY KIND
ARISING FROM OR IN CONNECTION WITH THIS AGREEMENT, EVEN IF INFORMED IN
ADVANCE OF THE POSSIBILITY OF SUCH DAMAGES. EACH PARTY'S MAXIMUM
AGGREGATE LIABILITY ARISING FROM OR RELATED TO THIS AGREEMENT SHALL BE
LIMITED TO DIRECT DAMAGES UP TO THE AMOUNT OF COMPENSATION PAID AND
OWING TO CONSULTANT UNDER THE APPLICABLE WORK ORDER AS OF THE EARLIEST
DATE ON WHICH THE EVENTS GIVING RISE TO THE LIABILITY OCCURRED.

I assume this has to do with damages resulting to the company from poor
work, as opposed to injury-on-the-job type issues. In any event,
before I call them and tell them I have not had any such coverage, I'm
thinking of speaking to an attorney first. But I thought I'd also
check with the "experts" in Internet land -- can I be in any legal
trouble, either criminal or civil, because I have not carried the kind
of coverage that the auditor is asking for?

CJ

CJ,

I agree with the suggestion of having your contract reviewed by an
attorney - that gets you covered with his/her liability insurance if you are
poorly advised. It also serves to make you aware of city/state requirements
for things like workmen's comp (usually not required if you are a sole
practitioner). An attorney can also advise you if no-liability or limited
liability clauses, such as the one you quoted, are supported by the law in
your jurisdiction.

I would also suggest that you get in touch with some local business
insurance agents and find out what it would really cost you for insurance -
both liability and errors and omissions. Liability covers you for the kinds
of things already mentioned - injuring someone or burning down the building.
Errors and omissions insurance will cover you if you make a mistake in your
work that winds up costing the client money. A few hundred dollars spent on
insurance can keep the wolf from the door if something bad happens. Along
those lines, don't forget to talk with your auto insurance agent - some
companies will try to default on claims if they weren't notified of your use
of a vehicle in your work.

Good luck in your business.

George King
G.E. King Marketing