• Last Updated:
  • May 29th, 2018 9:43 am
[OP]
Newbie
Aug 16, 2014
30 posts
15 upvotes
Toronto, ON

2018 - Best E&O / GL Insurance

Morning All,

I'm about to start off life as an independent contractor (Incorporated) providing Information Technology services for clients, the firm I'm going to be working with require 1 Million in both Errors & Omissions and General Liability Insurance... naturally they allow me to sign a waiver to accept all liability but that doesn't sit well with me.

I know the words cheap and insurance don't mix, but does anyone have a track record of working with any reliable, cost conscious insurance providers?

Recommendations/feedback would be great as I don't have a clue where to start!

Thanks In Advance.
6 replies
Deal Addict
Oct 7, 2007
3831 posts
1132 upvotes
Really do your homework on the company you decide to go with to make sure they will honour any claims. Insurance companies are getting really bad for giving the insured the runaround only looking for technicalities to avoid fulfilling their obligation when the time comes. Despite social media and all of the great websites out there, I have yet to see a site that compares the reliability, honesty and customer service of different insurers for different products. As a consumer, we have very little hope of knowing how many claims they turn down. I think some insurers will turn down claims 100% of the time and only consider the ones where people fight back. Unlike other products, we don't know who the customers of Insurance Company X are so it makes it more difficult to compare notes unless we can reach out and discuss these things with other people in the same boat.
Deal Addict
Aug 28, 2007
1843 posts
242 upvotes
Calgary
Personally, I would just sign the waivers.

Keep in mind, independent IT contractors only get assignments at significant sized enterprises because small businesses can't afford IT contractors. By extension, any business that has been around long enough to grow into a significant enterprise must have learned the important management rule of "Don't sweat the small stuff".

The next point is to not take yourself too seriously. Realize your role as an independent IT contractor is an outsourced task on which the business didn't want to waste their full timers. Ergo you are "small stuff" and won't materially impact their enterprise no matter what you do. And, in the unlikely event you somehow manage to screw things up, the logical response from enterprise management will be to simply terminate you, replace you with a fresh resource, and get on with their business at hand. Did I mention you are "small stuff" to them?

Remember, successful enterprises will only expend time, money, and effort to legally pursue a vendor when there is a realistic chance of winning financially. To put it bluntly, they won't chase you because you don't have millions from which they could recover anything. Chances are high your personal home is your biggest asset. They will have a hard time liquidating it because it the bulk of it probably belongs to the bank. In other words, we're not worth it.

I understand that your professional reputation will be severely impacted if you mess up. All you can do is work as diligently as possible to make sure you don't. However, buying insurance doesn't help you at all; it only allows the enterprise to go after somebody with money. Whether you do or you don't buy it, the end result is the same; your reputation is shattered but you gained no financial benefit. So I suggest you consider keeping the few $K of insurance premiums in your pocket instead.

And before you say I don't know how important your project is, or the key data or infrastructure you'll be handling, or how much they are paying you, I've been an IT consultant myself for the last several decades. I reiterate don't take yourself too seriously.
Sr. Member
User avatar
Dec 26, 2007
950 posts
169 upvotes
Just Confused wrote:
May 24th, 2018 4:03 pm
Personally, I would just sign the waivers.

Keep in mind, independent IT contractors only get assignments at significant sized enterprises because small businesses can't afford IT contractors. By extension, any business that has been around long enough to grow into a significant enterprise must have learned the important management rule of "Don't sweat the small stuff".

The next point is to not take yourself too seriously. Realize your role as an independent IT contractor is an outsourced task on which the business didn't want to waste their full timers. Ergo you are "small stuff" and won't materially impact their enterprise no matter what you do. And, in the unlikely event you somehow manage to screw things up, the logical response from enterprise management will be to simply terminate you, replace you with a fresh resource, and get on with their business at hand. Did I mention you are "small stuff" to them?

Remember, successful enterprises will only expend time, money, and effort to legally pursue a vendor when there is a realistic chance of winning financially. To put it bluntly, they won't chase you because you don't have millions from which they could recover anything. Chances are high your personal home is your biggest asset. They will have a hard time liquidating it because it the bulk of it probably belongs to the bank. In other words, we're not worth it.

I understand that your professional reputation will be severely impacted if you mess up. All you can do is work as diligently as possible to make sure you don't. However, buying insurance doesn't help you at all; it only allows the enterprise to go after somebody with money. Whether you do or you don't buy it, the end result is the same; your reputation is shattered but you gained no financial benefit. So I suggest you consider keeping the few $K of insurance premiums in your pocket instead.

And before you say I don't know how important your project is, or the key data or infrastructure you'll be handling, or how much they are paying you, I've been an IT consultant myself for the last several decades. I reiterate don't take yourself too seriously.
Some really good points - and actually you've mentioned some points of experience that I've been slowly learning over the years, particularly, don't take yourself too seriously. Also, you're not an employee. Sometimes the lines can seemed blurred for various reason - but reality is, employees are harder to fire than terminating a contractor.

I think there is some good information here. I remember reading a point in a forum that a company could be MORE willing to sue a contractor if they have E&O insurance because they actually have something to sue for, versus going after personal assets. Also, are you with a US or Canadian company. Can make a difference as US companies are more litigious than Canadian ones. I used a broker called Magenta Insurance - they were pretty good for setting me up and getting me a good rate. Thankfully I can't speak to how good they are with fulfilling claims.
Deal Addict
Oct 7, 2007
3831 posts
1132 upvotes
Just remember that everything is fine until it isn't.
Deal Addict
Jul 3, 2017
2676 posts
1787 upvotes
I would agree with @Just Confused overall. It's routine to get liability insurance at some point as your business grows, and some clients will require it in their terms, but in the end it's always up to you whether you think it's a good value for money for your business at this time. Any small business operator knows that there are lots of things that you "should" do according to all the requirements and guidelines you will get from all sides, but you would quickly be out of business if you diligently tried to satisfy everyone to the full extent that they want. You learn to make judicious compromises based on experience. One of those may be to gamble on not taking out insurance that's overpriced and that you are extremely unlikely to need. In my experience most of the insurance offered to your business is likely useless from the viewpoint of whether the circumstances would ever come up where you would want to use it, and the insurance company would not find a way to weasel out of paying. The reason why you would have this insurance is to meet business requirements such as having to show insurance to obtain a contract or a lease.

E&O insurance is particularly overpriced for IT contractors in my opinion. Just try to find an example of where it has ever been useful to someone in your business segment. Good luck!

In any case, it's not like you will get far by shopping around for the best price. You will find that the Canadian insurance industry is dominated by a small number of big insurers, and they have agreed between themselves to segment the market by region, business segment, and type of insurance so that there is little true competition.

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