MOST interesting. That could just explain what seems like an inexplicable situation. It seemed unlikely that the demand on the part of certain companies to freelancers to get insurance had no merit. I mean, if what you say is true, it STILL has no merit from the standpoint of its real and true necessity, but rather as part of crafting the right image. I do hope this trend doesn’t take off in a big way. Thanks for the insight…

PB

If you have a consistent, longterm contract with a large company, some of this may be about the IRS.

A number of companies disguise employees as independent contractors. Independent contractors cost less than employees (money owed to IRS). The IRS is tracking this type of activity and investigating those companies they believe are trying to get away with not paying employment taxes.

How do you prove that an IC is NOT an employee? You get them to look like a “real business”. Real businesses have business insurance and in some cases, business entities like the LLC.

When I was practicing law, my client, a small dialysis center ran into this problem. Retaining independent healthcare professionals is a standard industry practice. One of their ICs had the nerve to list them as an “employer” on their unemployment claim. Big read flag to the state treasury (thank God the IRS didn’t get involved).

With the help of a tax professional, I was able to get them out of paying back taxes. But…I recommended some changes for the future. You guessed it. That they only retain freelance healthcare professionals who have general liability and workers compensation insurance. From what I recall, their ICs didn’t balk, because they had a somewhat steady gig working with my client.

So you see, this may have nothing to do with errors or ommissions.

1. It crosses a line when clients try to control the finer aspects of your business. Controlling how you actually work and operate is a right reserved for employers (for instance, they have absolutely no grounds to tell you to register as a certain type of business as one poster noted).

2. If they want to make demands regarding insurance non-standard to the industry and type of contractor they’re working with, they’d better be willing to cough up the dough to pay for it – in full.

Kathy

Of course, this whole insurance thing smacks of the same thing – an arbitrary, not-well-thought-out, cover-our-butts move that makes people feel more secure when in fact, it does little except add a financial hardship to the writer. Welcome to the world run by lawyers.

Thanks An, for the primer on different types of insurance. I think I’m going to have to read it over a few more times before it truly sinks in… Though I strongly suspect that very few of folks people who’ve weighed in on this post are going to be running out any time soon to bulk up on coverage. For most of us, I imagine, it’s going to be a I’ll-cross-that-bridge-when-I-get-to-it proposition.

For me personally, let’s just say it’ll be tough to convince me that I should suddenly be concerned about something that hasn’t remotely touched me or anyone I know in 15 years. That’s not saying that I’m asserting there’s zero validity to any of these arguments, just that until I’m forced to, it’s not likely to happen. I know: by then, it might be too late. Yeah. OK.

And thanks Kara for a good story of a SANE resolution to a similar issue. I’m surprised you were able to talk some sense into them, but that bodes well for the rest of us to have meaningful conversations with clients about what they’re asking us to do.

PB

A collegue freelance copywriter told me an interesting discussion was going on here on insurances for copywriters. I just started as a freelance copywriter but worked for several years at an international major insurance broker. Not as a senior insurance specialist (they wanted to make me one, that’s why I got out and finally found the courage to return to my first love: writing), but I know a lot about it. I am not from the US, but from Belgium. Therefore sorry if my English is not 100% + with my explication also check US laws (Theory of what the different coverages mean, should be correct. Actual practice maybe not.)

I’ll try to explain what a general and professional liability cover, and tell you how I for the moment solved the problem.

A General liability insurance covers your business for damage you do to third parties (personal injury, material and immaterial dammage). It concerns damage which is not linked to your business/ your profession (non-contractual damage). Example: you visit a client and break by accident a very expensive chinese vase/ statue. This will only be covered by your public liability policy (a general liability policy includes public and product liability – I explain later). Other example: a client comes to your house and gets injured because he trips over the carpet, this will also be covered by your public liability policy

Difference between public and product liability:
Public liability policy covers you for damage your business does – the action itself. Product liability is for the damage done by the product you delivered (in Belgium it is called “liability after delivery”). For example: A machine you deliver causes an electric breakdown in a factory and therefor they cannot produce for a day (material and immaterial damage). If you installed the machine correctly and the electric breakdown was caused because of the malfunctioning of a specific part in the machine that was not made by your company your product liability policy will cover this damage. If the electric breakdown was caused by a professional mistake (something you should have known, eg. you swithed 2 wires or something)you will need a professional liability coverage. A product liability policy will not cover this, product liability only covers non-contractual damage. If you make a mistake on something you should have know because of your profession it is contractual damage. Your contract with your client states you will do your job correct and you are supposed to know your business.

Professional liability: protects your business by damage you cause as a professional, within you specialty/ business. Eg: a carconstructor knows how to construct a car. If he makes a mistake and the brakes are wrongly installed and the car can’t stop in time becausse of it, and an accident is caused, he will be covered by a professional liability policy.
An example of the difference between general liability and professional liability: a painter paints a door and spoils paint on the carpet. This damage will be covered by his general liability policy. A painter paints a door and uses the wrong kind of paint: this damage will be covered by his professional liability policy. If the painter does not have this policy, he will have to pay the damage himself.

Do copywriters need these insurances (my personal opinion):
General liability: I say yes, but only for the public liability part. Not for the product liability part. I have no example of accidental non-contractual damage after delivery of my text. I myself have a general liability insurance (only public liability). In general these policies are not so expensive (here in Belgium). The price you pay is based on the income of your business and the number of people your company has. (Pay attention to subcontractors, you might need to be insured for damage they do as well). The insurance limit for which you are covered also depends on your company. The minimum (if your company only counts yourself) I would say is $1000 000. SME’s usually get $2500 000 minimum.

Professional liability:
Difficult to say. The only reason I see to take it is if your client turns to you for damage made by the text you wrote. Eg. if you write medical articles for one of your clients, and because of a text you wrote wrong medication is used and people get ill … even if your client read your text several times before publication, he might turn to you and try to make you partially responsible for the damage made. These cases of course will come before a court, and the decision on who is responsible will depend on the jugde. But in case you are held responsible it is a professional liability policy who will cover the damage …
I for the moment have no professional liability policy (although I have one multinational I work for), I included a sentence in my general conditions which states my client is juridically responsible for all my texts. Hope that is enough.

My advice would be:
- In general: take advice from an insurer you trust
- General liability: yes, insure but only for public liability
- Professional liability: take advice from an insurance company or an insurance broker (an honest one you can trust and doesn’t only want your money) and also ask your client why he wants you to take that insurance. Negotiate. A lot of people/ companies do not know which insurance covers what and why and just ask something without knowing why (especially smaller companies), so you probably both need advice. Multinationals have a risk manager which deals with the insurances, so he should know. But a marketing department of a multinational probably won’t know.It might also have become a general rule of the company that all suppliers they work with are insured that way, so it is included in all contracts without thinking.
Also: I (and my ex-collegues) used to advice our clients to propose that their client should pay the premium (or part of the premium) if that insurance was really necessary for them. If their client finally was willing to pay, I never got to know ( it was business between my client and his client, we were in general not involved). I suppose if they really really want you, they do pay.

Good to know: Professional liability and errors and ommissions was (if I recall well) becoming more and more an issue (especially in the US) at the time I was working at the broker. Where this will lead to: No idea, for a lot of professions, professional liability is usefull and necessary I think, so more and more companies will probably take this insurance. But I hope it stays reasonable and logic. Professional liability insurances are very expensive.
On the other hand: it is logic that you are responsible for the professional advice you give … the discussion will be until where your liability goes.

Hope this all explains a little and helps you further in your business.

I wouldn’t recommend certification unless you plan to do a lot of work with the government. But if you’re a one-person biz, don’t plan on seeing a lot of bid opportunities coming up. The reason a number of small service providers are not re-certifying is because most of the contracts are for products like a/c, large equipment, etc. The certification requires you to go through supplier diversity, but let’s face it — A lot of jobs under $25,000 don’t even hit the SD desk, so they’re not even aware of them and can’t help us much.

Personally, I skip SD and go straight to the marcom depts. When they need a good writer, they hire directly.

It reminds me of when my husband (now ex) and I bought a house. We sat in a conference room with a lawyer, a bank official and a couple of witnesses. We signed contract after contract. We produced everything but our firstborn to prove that we were who we said we were. Finally, a document was presented for us to sign that basically said, if there were any omissions or errors in all the paperwork we had just been through, the bank would not be responsible…

My then-husband balked. “You mean to tell me,” he said, “that I’ve complied with your every wish, proven my existence on this earth and practically signed all these contracts in blood – and now you say you can’t be responsible if you’ve made a mistake?”

Dead silence.

For several minutes.

Finally, looking the banker in the eye, ex-hubs asked, “Where do I get a job like that?”

It was one of his finer moments.

We signed, of course. (And I still have the house!) But what a crock. I’ll never forget it and this situation reminds me of it all over again. I hope I can avoid this situation!!

Starr
(I see there is another “Star” here. I’m the other one…)

PB