Should I have liability insurance for my web design company?

We recently moved into a new house. When we tried to got our house insured, we were told that I need liability insurance, otherwise they won’t even insure my house. This is because I work out of my home…

So I got some other quotes, and it seems some other places did not ask for liability insurance… but my question now is, should I have this? Would I be stupid not to get this? What are the chances getting sued over a website? And how much could they sue me for?

Why not save yourself a LOT of aggravation (and money) and incorporate your company, this way your private possesions (like your home) couldn’t be attached.

We do this and it’s been fine, but personally your insurance company are being blood sucking leeches! Liability for web design is an absolute waste of money, unless you have offices where clients visit and / or employees.

Hey that is a good point! I am calling them about this!

If a client visits your home, trips up on a cable in your office and breaks his leg, you’ll need public liability insurance to cover yourself in case he decides to sue you. Incorporating your company will in most cases ensure that you don’t personally lose anything, but it’s still not a substitute for liability insurance - they could come after all your company assets (e.g. computers, office equipment, and anything else registered to the company).

Also, it’s pretty much essential that you also get indemnity insurance. This will protect you or your company from being sued for negligence, copyright infringement, and various other pitfalls of providing a professional consultancy/development service. I really advise you invest in indemnity and liability insurance, it’s basically a cost of doing business.

Most home insurance companies like to beef up policy costs if they find you run a business from home, but there are many (at least in the UK) who don’t consider computer and admin work to be ‘business’, its usually only when you start bringing clients to your home that they start getting itchy.

I just talked to another insurance agent from a different company. He told it does not matter if my business is incorporated. The insurance company would still need me to have liability insurance.

This guy actually told me to go with the company that gave me my first quote. He gave away the business because I need this done next week, and he could not do it that fast.

So I guess yes, I need to just bite the bullet, and pay the money. I really dislike it but yes, it is the cost of doing business… I just hate that as soon as you are a business, everything tripples in price!

If you do business out of your home (regardless of if you operate as an ind or corp) and people come there for meetings, etc. you are liable if someone gets hurt. I have full-time consultants working onsite AND offsite with clients, and I really dread my annual liability + O&E insurance bill. But, for one person in a house it shouldn’t be much.

Yes, it’s not much - I have £1 million public liability and it’s something like £5 a month, I think it comes to a total of £25 a month including my indemnity insurance.

Shadowbox is quite right about indemnity insurance, certainly in the UK you can’t really get away with it if you have set up a limited company.

Especially true for all you software/application programmer’s out there. All it takes is one disatisfied customer to say that it was your application that caused their server to crash and x amount of business days were lost as result and you’re looking at a sizeable legal claim.

So far the lowest quote I have is $4500 CDN

Seems high. What does that include?

I don’t have the details right here… I would be covered for 1M. The costs are $3,500 for Errors & Ommissions and $1,000 for Commercial General Liability… So maybe I can get by with just the General Liability.

Even $3500 for E&O is quite a bit. I pay about the same but I do software projects for goverments and that’s much risker than web design.

Web design generally isn’t high risk, so E&O should be quite low.

Shop around, maybe?

$4500 for liability insurance, for just one sole trader? Shop around, because that’s really high (unless things are really different in Canada). When I first looked around for insurance I got some outrageous quotes from some very stuffy companies who made me fill out huge, 10 page + forms, but there are some on the net who are more realistic.

You should expect to pay proportionaly more for indemnity insurance, but that will depend on what type of projects you handle (e.g. if you provide hosted services as an ASP your quote will be much higher).