I am working as a subcontract lead auditor in Canada and have been asked by a registrar to obtain professional liability insurance.

I have asked a few insurance brokers and they indicated that the cost would be a minimum of $2500.

Does anyone have any experience with professional liability insurance and what was the approximate cost?


Thanks for your help!


Danny

I am working as a subcontract lead auditor in Canada and have been asked by a registrar to obtain professional liability insurance.

I have asked a few insurance brokers and they indicated that the cost would be a minimum of $2500.

Does anyone have any experience with professional liability insurance and what was the approximate cost?

Thanks for your help! DannyThat seems pretty high - but maybe not, since physicians and surgeons working in the USA are paying tens of thousands of dollars for liability insurance and upwards of $100,000 for specialties like cardiology and neurosurgery. In the late 1980's, I had an errors and omissions policy of my own in addition to my company's coverage (we were investment bankers specializing in targeting and shepherding private companies through the IPO process.) As I recall, my annual premiums were about 1/10 of 1% of the face value of the policy. They did NOT cover against me stealing intellectual property from a client.

Ask this registrar who they currently buy their own insurance from and what they pay and for what total coverage ($100,000 or $1,000,000?) Obviously, you want to have an insurance carrier that is acceptable to them. Especially ask to see and keep a copy of one of their policies and the fine print in it so that you can shop for a comparable policy.

I'm presuming they are only looking for an errors and omissions policy, as opposed to full liability [which might cover stuff like you stealing secrets and peddling them to a client's competitor or using information to enrich yourself in the stockmarket.]

One website I looked at described coverage this way (emphasis in blue is mine) Note the premium should be ameliorated since you are theoretically supervised by the Registrar hiring you who should be backstopping your work product before client's damages reach catastrophic proportions:
Professional Liability Insurance (Errors and Omissions Insurance) is your most critical coverage. Professional liability coverage protects you against loss from a claim of alleged negligent acts, errors or omissions in the performance of your professional services. This might include loss of client data, software or system failure, claims of non-performance, or negligent oversell. Be sure your professional liability policy includes the following key features:

Coverage includes legal defense cost. Professional liability insurance will pay for any resulting judgments against you including court costs up to the coverage limits on your policy.


Coverage extends to both W2 employees and 1099 subcontractors. Coverage should protect your company from claims resulting from the work done by 1099 subcontractors on your behalf. (It is important to note that 1099 personnel need their own errors and omissions insurance because your policy does not defend them if they are sued separately or in addition to you.)

The number seems high to me also. As a 1099 Contractor/Consultant I was required to obtain Business Liability insurance by companies I worked for. For $1,000,000 coverage, I was paying $380 per year.

One thing you may want to explore is the scope of your work and the liabilities associated with it. I was in a situatiuon where I was either performing tasks, or MAKING SUGGESTIONS and RECOMMENDATIONS. The company was in the position of implementing or not. I believe that limited the liability. As an assessor, you may be in a different category with higher liability.

I'd also see if you can get a hold of what others doing what you do are paying, or see if you can obtain the actuarial info. Maybe overkill, but may be worth knowing.

I went through this a couple of times and it came down to my asking what the customer wanted me to insure against? Never got a good answer and have never bought insurance.

To those of you who have bought insurance as a consultant or as an auditor, what, specifically, are you insuring yourself against?

I can't see why a consultant would need insurance, aside from knocking over equipment or something like that....or because the company would sue for bad advice......in CA that is a likely concern.

When i do assessments of organizations however, one of the requirements is to check for "adequate" insurance. That of course is a judgment call. Perhaps the registrar was asked by their accrediting body for insurance and they got zealous regarding insurance?

Hershal

I thank-you all for your helpful information.

One of the problems I have with this insurance is that I am not able to apply it just for my subcontract auditing, which represents about 10-15% of my revenues.

I am working for 3 other registrars and they do not require it.

I asked the registrar to waive the insurance but to no avail.

I also asked them to indicate where their other subcontract auditors get their insurance and I am still waiting.

Thanks again.

Danny

FWIW, I had some discussion about this earlier in the week ... the main thing I got from the meeting was that one should have a general business insurance policy, and it is common (in the USA) for those to include up to (typically) US$1,000,000 professional liability insurance. For this type of coverage I heard people saying they paid from $300 to $500 per year - one person said $2500 and there was unanimous agreement that he was being badly ripped off! The consensus was that this should be adequate for a consultant or trainer ... but a professional engineer, attorney or medical practitioner would need a LOT more, including errors & omissions coverage, and those professions cost a lot more to cover. (A lot of them also earn a lot more as well!)

I believe that it may be connected to an LLC. title. A friend of mine was consulting and a state affiliated consultant company wanted to subcontract him and required him to be an LLC. to work for them,which required him to have insurance. Next time I talk with him I will get more details. I do know he did not do it because of the insurance cost and the ROI.

Morning all. I have also been asked to obtain liability insurance for 1099 consulting work I do. Its funny here in the US that some people want and some people don't. Also, I can further corroborate that prices are all over the charts. I have had quotes so far from 1200 a year to 2500 plus some additional insurance I was told I "had to have". Yeah, whatever.

Be very careful who you go through or you will get ripped off. I also wonder how many insurance companies cut and run if you would ever have a need for a claim.

Having said that, The Taz!, where are getting this insurance for 380 a year? Send me an email or post a reply. They might have a new client if they actually back it up.

Thanks!

Just curious. Can anyone explain why a quality consultant or auditor would need liability insurance?

I'm not an insurance expert, but here goes:

Error and omission insurance provides liabililty coverage for potential mistakes, unforseen damages etc., in intellectual support. This may not cover potential damage, real or asserted through litigative processes, in tangible goods and equipment.

Personal liability coverage should protect from property damage in equipment, etc., that the consultant may be interacting with.

I'm not an insurance expert, but here goes:

Error and omission insurance provides liabililty coverage for potential mistakes, unforseen damages etc., in intellectual support. This may not cover potential damage, real or asserted through litigative processes, in tangible goods and equipment.

Personal liability coverage should protect from property damage in equipment, etc., that the consultant may be interacting with.I just happened to browse the ASQ site today to check out the new ASQ Forum software (more info in another thread, another time) and found this interesting tidbit
Affinity Benefits

Professional Liability/Errors & Omissions Insurance

MIMS, Int'l. has been providing professional liability/errors and omissions insurance since 1986. They are licensed in all 50 states and have brokerage affiliations in Canada, Mexico, and the United Kingdom. They offer Proinsure Professional Liability Errors and Omissions Insurance and Probop General Liability Insurance Plus.

For complete information on these programs and the online application, visit http://www.mimsintl.com/content.asp?CID=55 (http://www.mimsintl.com/content.asp?CID=55) or call 800-899-1399.

Life, Disability, and Major Medical Insurance

MARSH Affinity Group services offers personal insurance plans and health services through top industry carriers. Current offerings include Major Medical, Term Life, Cancer Expense, Identity Guard, Catastrophe Major Medical, Elder Care, and Lifeline Screening.

For complete information on these offerings and online applications, visit http://www.insurancetrustsite.com/ASQ (http://www.insurancetrustsite.com/ASQ) or call 800-424-9883.

MBNA/ASQ Credit Card, Travel Rewards, and Financial Products

New this year is the MBNA World Points program, which rewards you with one point for every dollar spent using your MBNA/ASQ credit card. Points can be redeemed for cash back, brand name merchandise, or travel. MBNA offers the MBNA/ASQ Platinum Plus MasterCard in the United States and Canada . A royalty based on retail purchases is returned to ASQ for the advancement of the quality profession.

For more details or to apply, call 800-847-7378. Kudos to ASQ for recognizing the situation (of need for insurance) may exist for enough members to offer the affiliated benefit. For the many times I bash the ASQ staff - the insurance benefits for liability and health could be very worthwhile.

Wes,

I called MIMS six weeks ago and they sent me to an affiliate in Canada. I have not received a response yet.

Danny

Wes,

I called MIMS six weeks ago and they sent me to an affiliate in Canada. I have not received a response yet.

DannyIf you are an ASQ member, raise a BIG STINK! I will give you President John Case's personal phone and email. If we (as an ASQ member, I take ownership responsibility) grant a commercial organization our aegis [shield or protection], the commercial organization owes it to us to cater to our members.

Any organization which drops the ball on customer service needs to be called to account. If they then ignore you, it's time to publicize their shortcomings by name, rank, and serial number. Truth is always a shield.

:applause: I am so pleased with the "Consultants and Consulting..." forum!

After 30+ years in quality, the past 20 or so in management, the last 10+ in senior management, I finally decided that, since I'm too young and too poor (still) to retire, I'd better DO something... DIFFERENT. Why? Because I'm at the top of my earning potential ... as somebody else's employee (my salary has been flat for about 7 years and I haven't seen any light on the horizon with higher paying positions becoming available)... AND... because I'm getting so fast at implementation of smooth running systems and problem-solving, that I work myself out of job in less and less time. When I started out... it used to take me 5 years... then 3.... .then 2.... 1 1/2 .... I'm down to less than a year, now. After things start running smoothly, two things happen without fail: 1.) I hire and train my eventual replacement for about 1/2 my salary:whip: ; and 2.) I get bored :cool: . Sometimes a third thing happens, too. 3.) The company is divested/acquired (usually to/by a competitor, btw) :mg: .

Anyway.... this last time, I decided to make a run at the consulting hill. I'm still tweaking my business plan. For the past few months I've been trying to figure out things like.... what services to offer, how much to charge, the best approach for marketing, what kind of insurance I should carry, how much operating capital I should have available as liquid assets, how to best manage my website, whether or not to produce tangible products for sale (software, books, gadgets) ... etc. etc. etc. :confused: So many of the answers are HERE!:D Even when I did web searches.... trying to find specific examples of quality-related independent consultants was like looking for a needle in a haystack. If I could have found one, I'd have started asking a bunch of these dumb questions and would likely have made a nasty pest of myself. Instead... I can pester people who seem to actually ENJOY talking with new kids on the block ... like me!:biglaugh: I feel like I've come home to FAMILY! I hope you don't mind all of my questions... but I REALLY REALLY REALLY want to make this business work. I've got another 15 to 20 years of work ahead of me... and I want to make them good ones!:thanx:

You're all GREAT!:applause:

A lot of this has been covered below but my two penn'orth.
I am working as a subcontract lead auditor in Canada and have been asked by a registrar to obtain professional liability insurance. Here in the UK we normally require professional liability insurance. The logic is that an auditor may in the course of carrying out their professional activity make a mistake that leads to a loss for the registrar's customer.

;) Believe it or not, it has been known that auditors raise non compliances that aren't actually non compliant with the standard. This can cause the organization to spend time, effort and sometimes money in "correcting" a non - existent problem. If it is brought to their attention they might find out that they have wasted same and seek recompense from their registrar (as that is who the contract is with).

The registrars insurers generally want to see the load spread to non employees and hence require insurance for contractors.

I have asked a few insurance brokers and they indicated that the cost would be a minimum of $2500. Our consultancy (3 people) is insured for about $1200 to cover quality, environmental and health & safety activities - auditing and consultancy. The cost often depend on what technology you work in and what countries.

Also see this discussion thread: Liability Insurance for local consulting jobs (http://elsmar.com/Forums/showthread.php?t=19458).