Liability Insurance

The following is a synopsis of a discussion on the Editors Guild listserv in February 2007.

   Question

I am preparing a bid for an Oregon State contract, and the RFP says I need general liability insurance. Does anyone know the process for requesting a waiver on this? Has anyone managed to have it waived? If not, does anyone have a source for obtaining this insurance? Last time I checked, which was several years ago, I was not able to find anyone willing to sell this to me. At least not at a rate I could afford. I also recently heard that it may be possible to purchase general liability insurance on a per-project basis. Does anyone know more about that?

   Responses

This usually comes up when a standard contractor bid request--for, say, repairing a roof--is handed to a writer. When I've seen such requests, I have successfully pointed out the foolishness of the request.

Maybe it'd be good if some insurance company would provide a freelance writer's package, with the various kinds of extra coverage freelance writers and editors actually need and liability coverage thrown in free.

I'm not a lawyer, but I've seen this requirement on most standard contracts, and I have always gotten it waived without problem. I just contact my client and explain that I don't have the insurance because it isn't relevant to writing and editing services: I point out that the client always has the final say over what they put into print, and they own everything I produce, which means they can change it any time they like. As I see it, liability clauses are usually there to protect a company from lawsuits based on product deficiencies that are created by a subcontractor manufacturer/designer of the product.

I ask my clients if they would prefer that I strike out that part of the contract and have me initial it, or if they'd like to send me a new contract to sign. If it's an RFP, I usually indicate that it's not applicable for the services I provide, and I've never had any flak about it.

Last year I came across the same question and decided to poll all the sole proprietor creative business owners in my email address book. Here's the summary of the responses:

Waiving Requirements

I also interviewed an insurance agent who sells business liability coverage. He said, "It is crazy, it's silly sometimes. You don't have a lot of exposure; I know that some companies waive it. Exposure is so slight that the premium should be $50, but no insurance company will do that. Writers and people who don't have customers coming to them and who don't manufacture anything have no real exposure."

General Liability
No one who works from home maintains any other full-time general liability beyond their homeowners insurance. One person who has an office not in her home has an additional general liability policy that allows additional insured certificates to be added.

Auto Insurance
No one has ever added a client to their policy. There was only one other comment: -- "My car is my personal property, not a business auto, and the insurance company won't issue additional insured certificates. I have always gotten this waived on contracts."

Business/Professional Liability Insurance
Only two people maintain this full time. One has a lot of very expensive specialized computers and large printers, and the other says "I am not usually asked about it unless the contract is larger and prolonged." Another person commented: "Professional liability is most commonly held by professionals such as engineers or architects who may be liable for professional errors (e.g., if a building falls down). Few small businesses such as ours have it (it's very expensive), and I've always gotten it waived."

Two people and the insurance agent noted that sometimes people just purchase a policy when it's needed for a large project -- the bottom lines mentioned were $6,000 and $10,000. The insurance agent noted, "Otherwise, it's not worth it; it's cost-prohibitive" and one person commented, "I have had opportunities to do some small projects for those clients but have refused since it doesn't pay for the insurance. I would reinstate the insurance but only for huge projects."

And in general, one person noted, "It's an example of not being small-business-friendly."

Additional notes:
Recommended insurance providers:

I have Allied Insurance for my homeowners policy with JBL&K and I called them about upping my general liability from $300,000 to a million. They said they could up it to $500,000 for $10 more per year, but to bring it to a million I'd either have to bring my car insurance to them or change to an umbrella policy that would require my upping my auto insurance. I decided to raise it to a half million, and just turn down low-budget jobs where they won't waive the insurance requirement, and purchase it as needed for big ones.

I do a lot of translation, and some translators carry liability insurance to cover any errors they might make that might cause liability claims, for example, a glossy brochure that needs to be reprinted because of an error or a mistranslation in a technical manual that causes damage or injury.

Admittedly, the possibility of such errors is greater in translation than in straight editing, but it could exist.

More on Insurance: I would not so readily dismiss a potential client's request for insurance. Here is a part of an email dialogue between me and a client's insurance risk person. He is telling my client to hire someone else instead of me next time if I don't get insurance -- and this was for a $500 contract. This is also the client's perspective.

"The issue of large companies or government entities requiring insurance limits and coverages is not new. As a public entity, my rationale is that [our agency] needs to protect public funds, so we require types of insurance to help ensure that public funds are not diverted away from operational projects (like this contract) for things like auto accidents, workers compensation claims or other liability claims arising from the use of vendors.

"These types of claim may present direct costs to [our agency] arising from the actions (or claims arising from the use) of a vendor when a claimant seeks to sue both the vendor and [our agency,] 'the deep pockets.' These types of claims can also present indirect costs, such as losses not related to our contract that might cause an uninsured vendor to go out of business without completing the contracted work. Even if [our agency] doesn't lose money directly, it loses staff time in the search for a new contractor.

"In my mind the question isn't 'why should the vendor buy insurance for a $500 project?' The question is 'why should [our agency] spend $500 on a vendor that doesn't have insurance?'

"From [the department's] perspective, the answer is probably that 1) the vendor does good work at 2) a reasonable price. Therefore, I will normally agree to a one time request to waive insurance requirements.

"However, if [the department] intends to periodically or repeatedly use any uninsured vendor, then an ongoing potential for an uninsured loss exists. On an ongoing basis, I encourage [departments] to select vendors that meet [our agency's] insurance requirements to avoid (or reduce) exposing [our agency] to claims or contract disruptions from uninsured vendors."