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If you are working with large comapnies they will generally require that you have insurance. Their specific demands may vary but typically you will see the following:

General Liability Professional Liability Worker's Compensation (If you are a sole proprietor it is generally not necessary) Automobile liability ($1 million is common)

** If you were selling a product to these companies you speak of a GL policy would suffice to CYA for product related claims for BI & PD however the instant you tell the insurance carrier your operations are not product related but service oriented (acting as a consultant) they will slap a "professional services" exclusion on your GL policy before you can blink. This exclusion erases any coverage you might have had for claims against your company for services performed for a fee.

You'll need to secure a Professional Liability policy OR E&O depending upon the exact category / scope of your operations to provide your firm with coverage for consulting work.

If the consulting is done as an added service to facilitate the sale of your product then this whole dilemma can sometimes be resloved without the need to purchase a separate PL or E&O policy by the broker negotiating with the insurance companies.

All-in-all you should secure (at the very least) the following types of insurance with adequate limits and deductibles:

General Liability


Professional / E&O

Workers compensation

Employment Practices Liability (if you have employees or plan to have employees)

Umbrella / Excess

Pollution (depending on who your clients are and the scope of your operations)


This information is simple (AT BEST) and this issue is much more complex than mentioned here and must be discussed with your agent. Coverage varies greatly so be sure to discuss ALL terms and conditions with a knowledgeable agent or broker. If your operations are large enough, you should attract the attention of talented brokers... or at least scare away the dummies. Beware of the contracts & agreements you will enter into with the larger companies as they can impose liabilities on you which are broader than the coverage contained within your insurance policies.

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2010-09-10 15:01:52
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