To understand why your clients want you to have General Liability Insurance, let's start with a few examples:
- A client gives you a tour of his facilities, including the server closet. You pull the closet door shut behind you after exiting. The next day the client calls you up, blaming you for the fact that his servers overheated.
- While meeting with a client's CISO to talk about fitting your tech into their security framework, you accidentally knock over a cup of coffee, spilling it on her laptop. She's furious and wants you to pay for the cost to replace her laptop and recover her data.
- You've been tracking a package online, waiting for it to show up at your door. Suddenly, you hear a thud outside. The delivery driver has slipped on a patch of ice on your sidewalk and is crouched on the ground clutching his broken arm.
What do these scenarios have to do with General Liability Insurance? In each case, you could be sued – either for damaging property or causing an injury – and in each case, General Liability Insurance may cover your lawsuit costs.
3 Reasons Clients Want Contractors to Have Technology Liability Insurance
You may recall that General Liability Insurance may cover third-party lawsuits involving bodily injury, property damage, and reputational harm. Clients often want their tech contractors to have General Liability Insurance for three reasons:
- It offers reassurance that if you damage their property, they'll be able to sue you and get their money back.
- A client's risk management team may want all contractors to have this coverage; it can keep their legal costs down if you and your client are sued in a joint lawsuit.
- It shows you're financially secure and protected from common business risk exposures.
The first two reasons are simple enough: General Liability Insurance makes it so your client's property is a little more secure and improves their risk management. But the third reason is more complicated. Why do clients want to know that your business is financially secure?
Think of it this way. Clients know that businesses with General Liability Insurance are in a better position to survive the financial shocks that come their way. If someone slips and falls at your property, you'll have GL Insurance to cover those costs and help you focus on your work. Clients like that stability.
Meeting General Liability Insurance Requirements in Client Contracts
Before you sign an IT contract or consulting agreement, a client may require you to have General Liability Insurance. These requirements are typically outlined in the contract itself and you may have to provide a Certificate of Liability Insurance to show that you have up-to-date coverage. For a more in-depth look at contracts, check out our post “4 Contracts Every Tech Startup Should Have on Hand.”
If you're in this situation and looking for IT liability insurance, use our online insurance app to get free insurance quotes. You can also talk with an IT insurance agent who can answer your questions about small business insurance.