In this episode, host Kevin Griffin addresses a question from his friend Sean regarding whether to opt for errors and omissions insurance or general liability insurance, the process of obtaining them, and their cost. The discussion covers the significance of insurance for consultants, freelancers, and contractors to mitigate risks like lawsuits for professional mistakes. Kevin elaborates on general liability and professional liability (errors and omissions) insurance, sharing personal experiences with client requirements and the aftermath of a challenging project. Additionally, the host recommends using techinsurance.com to find insurance quotes and concludes by emphasizing the importance of protecting one's business and personal assets.
Insurance: techinsurance.com
00:00 Introduction to Insurance Queries
00:26 The Basics of Insurance for Freelancers
02:08 Understanding General Liability and Professional Liability
03:20 The Importance of Errors and Omissions Insurance
05:27 Real-World Insurance Requirements and Negotiations
07:18 The Cost of Insurance and Its Value
07:57 A Personal Client Experience and the Safety Net of Insurance
11:55 How to Acquire Insurance for Technical Consulting
13:25 Conclusion and Invitation to Join the Community
Creators & Guests
What is Multithreaded Income Podcast?
In the "Multithreaded Income Podcast," host Kevin Griffin navigates the nuanced landscape of generating multiple income streams as a technologist. Aimed at professionals who wish to diversify their revenue while maintaining a focus on technology, this podcast dives deep into unconventional strategies, untapped opportunities, and actionable advice.
It's time for the multi
threaded income podcast.
We're like insurance for a
turbulent tech landscape.
I'm your host, Kevin Griffin.
Join me as I chat with people all around
the industry who are using their skills
to build multiple threads of income.
Let us support you in your career
by joining our discord at mti.
to slash discord.
Now let's get started.
Kevin Griffin: Hey everyone.
Welcome back to the show.
We have another installment of
questions from my friend, Sean.
And today Sean is asking about insurance.
Specifically.
Should he get errors in emission
insurance or general liability.
And how do you go about the process
of getting either of those and what
are reasonable rates for the type of
insurance has you might want to get.
That's an excellent question, Sean.
And on this solo episode, we're going
to cover just some of the basics
around insurance for independent
consulting, contracting freelancing.
First things first, do you really need
insurance going into your first contract?
Professional answer is yes, you
should probably have insurance.
Insurance is always a good
thing because let's discuss what
the purpose of insurance is.
The reason you have insurance
is to mitigate risk.
And risk for someone in our position
that is a consultant or a freelancer.
Could be big.
What if you mess up and what
have you messed up royally?
You don't want to be on the hook for.
The damages that could occur if
you were to get sued or some sort
or lawsuit is brought against you.
That's why it's a really
good idea to have insurance.
Let's talk about the
different types of insurances.
You probably care about.
It's not the exhaustive list of
all the types of insurance that
you could have, but the ones that
you might want to care about.
Uh, and these are also insurances that.
Are normally required for
some larger companies.
And this is how I'll lead
into the conversation.
I did a contract many years ago for Harley
Davidson and I was going through there.
Supplier on-ramping
they had a requirement for not
just general liability insurance,
but professional liability, which
includes errors and omissions.
And.
What exactly does that mean?
First you have general liability.
General liability.
Doesn't really mean anything for us.
People working at home.
In front of a computer.
Because it's meant to cover just
general things for a business.
If someone gets hurt, uh, while
on the job at your business.
That should be covered.
If any property gets damaged.
Uh, In the means of doing business general
liability should cover that as well.
Uh, there's also things around.
If you get sued for slander or
libel, just general bad things.
And then there's all sorts of
degree of like medical payments.
So if, um, Let's say you had a real
business and someone comes in the
door and they slip on the floor.
They're not an employee of your
business, but they get hurt.
Your general liability would
cover things like that.
Now that doesn't really
mean anything to us.
And it's not typically a
thing that we care about, but.
It's usually something that.
A lot of larger companies will
require you to have just in case.
The second type of insurance,
which is professional
liability, and this is errors.
Omissions.
Insurance.
This is the one you care about
and the one that you should
probably have all the time.
This covers you in a
lot of different cases.
Specifically.
If you screw up, if you screw up on
purpose or you screw up accidentally.
And the business has.
A legitimate claim that you caused.
Damages to the business
because of your work.
This is where.
You can come back and say, all
right, I have errors and omissions.
Insurance.
To cover.
The damages here.
Uh, and it could be for a couple of
them, for things like negligence, that
means you just provided bad advice.
You did the wrong thing.
That's stuff happens.
That's why you have insurance.
Uh, sometimes you make a mistake
and it costs the business money.
So maybe you, uh, you brought a job.
That accidentally overcharged.
A bunch of customers or you wrote
a job at under charged customers.
That could be claimed
under errors in a missions.
Any mistake you make it covers legal fees.
I specifically, in my
professional liability
insurance, they give me a packet.
And on the first page
it says up at the top.
If you are in.
The case of ever being sued.
Here's the phone number to call?
Like we will take care of it for you.
Just call this phone number.
And that's really useful to have,
especially because a lot of us
don't have lawyers on retainer.
And that's not something
I advise for anyway.
But if you need help.
And.
You call the insurance company.
The insurance company
is in the best position.
Two.
Look after your, your needs, because
ultimately if it comes down to a
settlement or a judgment, It's insurance.
It's going to pay because
you're paying for the insurance.
Now let's go back to my Harley Davidson
example, where I was being required
to have both these types of insurance.
And they were also asking
for workers' comp insurance,
which is another type that.
Someone might ask you for, I
was able to go back to Harley
Davidson and said, this is kind of
a dumb insurance for me to carry.
I'm not going to do it.
And it was specifically
because I'm an employee of one.
In my business.
Specifically if I was getting hurt
because of doing something on the job.
I'm probably not going to pay myself
workers' comp for, for my injury.
I'm just going to take the time loss.
Uh, that was good for them.
They, they were fine dropping the
workers' comp insurance claim.
But they were still stringent
on the general liability
and professional liability.
they wanted a million dollars of general
liability insurance, which sounds like
a crazy big number, but it's okay.
We're going to keep talking about this.
And then they wanted to maybe $3
million of professional liability.
I was able to go back and say, look.
Me having $3 million of
professional liability.
Is not probably going to happen
because it's an outrageous expense
for the type of work that I do.
There's no task that I'm doing on
the project that would accidentally
cause $3 million worth of damage.
I don't know, maybe it could
happen, but making a claim that.
A million dollars of
professional liability.
Was more suitable for the position
I was coming into was perfectly.
Uh, reasonable.
So I have that actually I have $2
million for professional liability.
And I paid for both of them every year.
I just keep renewing the policy.
And.
This kind of leads on to everyone's.
Next question is how much does that cost?
Well in the grand scheme of
thing, I pay about $400 a year.
For general liability.
Now that's just an estimate because I
don't really look at the numbers anymore.
I get the invoice, I pay the invoice.
I don't really think about it.
Professional liability is still around 450
to $500 a year for having that coverage.
And it's really nice to
know that I just have.
All that protection around
myself and my business in case
that something were to happen.
So if we take the Holly Davidson example
and we move forward a little bit, Uh, I do
have a couple of times where I have been
very thankful to have had the insurance.
And there's one.
Clients in particular that I wrote a
post on this, I call it Stockholm clients
where I had a client that was amazing.
Amazing.
I love this client to death
and they love the MI, which is
a great relationship to have.
And.
Over night, this relationship.
Soured because I was taking on more tasks.
I was working on a large project forum.
And the project was not going.
In the direction that
we all wanted it to go.
And, uh, against my better judgment
and recommendations, they ended
up going live with a product
that was not meant to go live.
It needed.
Another couple of weeks of testing.
Fine tuning some of the aspects of it.
But the client was insistent that
we go live with the project and I'm
here to do what the client wants.
So we went live with the project.
It was a complete disaster and that's
a conversation for a whole nother time,
but we went live with the project.
And I ended up spending three
or four weeks just working.
12 to 15 hour days, just trying to fix
this mess and get this application back.
On track and that's after a
lot of data got just kind of
screwed up in the process.
And again, It was my fault
because I wrote the application.
But I had also advised that the
application wasn't ready to go live.
So a lot of the risk fell onto
the client to go live with this
and they approved everything.
So.
We went live with this.
Yeah, I got screwed up.
I fixed it the best I could.
Uh, I decided along the way
that this was not a relationship
I wanted to continue anymore.
So per my contract, which we've
talked about in other episodes.
I started the process of
telling the client I'm no
longer going to work for you.
I will help you through a transition
period to another provider, but I'm done.
I'm getting out.
For the next couple of weeks,
I didn't sleep very well.
I was very stressed out
about the possibility of
being sued because there was.
There was some damage done
and I fixed the damage.
Like I didn't leave them in a bad place.
I took care of everything
that, that went wrong.
But you still get this feeling in the
back of your head, like, oh, they,
they may come back and Sue and the.
Person in charge of
this particular project.
I would have put it past them to.
Start the lawyer process.
Like they, they were, they
were that type of person.
Um, thankfully that never
came down to, to a lawsuit.
I never, never got a
call about it ever again.
And I haven't heard from that
client in five, six years.
It all ended well, but this is one
of those cases where I was stressed,
but I felt protected because I
had the contract in the place
and the contract had no warranty.
It said.
Whatever y'all accept is what you get.
And if you accept it, It's on you.
Uh, also I had no warranty.
Like there was nothing in there that
said, this is really, it doesn't
matter how bad Kevin screws up.
Um, if you accept it and
it goes into production.
Cool.
It's on you.
But that doesn't stop someone from.
Issuing a lawsuit.
So if they did Sue me.
For damages or whatever they wanted to do.
Well, I have the insurance
and the insurance backed
lawyers to come to my aid.
And helped me through these cases.
Now.
Last question.
And we'll wrap this up is how do
you get these various insurances?
Especially if you're someone out
there doing technical consulting.
I recommend the provider
I used and it's a broker.
It's tech, insurance.com.
I'm not affiliated with them.
I get no kickback.
You just go to tech, insurance.com.
They have a really good
questionnaire about the type of
work that you're trying to do.
And where you live and they'll find you.
Various quotes.
It's no different than buying
auto insurance or homeowners,
insurance or renters insurance.
You just ask.
Couple of questions and they'll
tell you who has the best rates.
You just go with the one
that works best for you.
So I have insurance through the Hartford.
And his Cox.
In the United States.
They both provide great service.
There's a checkup every, every year to
just make sure you're getting the right.
Uh, insurance, but they don't really
try to upsell you to anything new.
I think the biggest leap was
in cybersecurity protection,
but for the most part.
The importance of just got
added to the existing policies.
I didn't have to go buy
additional insurance.
So I hope that was helpful for you, Sean.
I hope you're listening.
That was a great question that I think
a lot more people should ask, take
the steps necessary to protect your
business, because ultimately it's going
to protect your business and your family.
And you don't want someone to be
able to come in and touch that.
Um, but thank you all
so much for listening.
If you want to continue this
particular conversation, you should
really come join our discord.
At MTI dot T.
Slash discord.
That's a short link that
gets you in a community.
And we could talk about
this a little bit deeper.
Uh, not just myself, but
the entire multithreaded
income community is there to.
For you to.
pitch ideas off of, or to get your.
Questions answered.
We would love to help, but until
next time everyone take care.
I'll see you in a week.
You've been listening to the
multi threaded income podcast.
I really hope that this podcast
has been useful for you.
If it has, please take a moment to leave a
review wherever you get your podcast from.
And don't forget the
conversation doesn't stop here.
Join us on our discord at mti.
to slash discord.
I've been your host Kevin Griffin
and we'll see you next week.
Cha ching!