General Liability Insurance Helps Small IT Businesses Win New Clients
If you're hired as a consultant, your client contract will likely require you to carry General Liability Insurance (GL) In fact, many clients won't sign a contract until you can prove you have an active GL policy.
Insurance terminology can get confusing, but one trick to help you make sense of everything is to know that when you hear the word "liability," you're really talking about lawsuits. "Liability" is legal lingo for "responsibility:"
a business's responsibility to fix a problem it created or to pay financial restitution after causing injury or financial loss.
Liabilities come in different categories. In insurance, your general liabilities are those regarding…
- Property damage to third parties.
- Bodily injury to third parties.
- Reputational damage to third parties.
Who counts as a third party? Anyone besides your insurance provider and people employed by your company.
Here's an example of what General Liability Insurance can cover: you're working at a client's office, wiring new hardware. As you run cable above the ceiling, you accidentally damage the ceiling and your client demands that you pay for
what turn out to be very expensive repairs.
When the client sues you for replacement costs, your GL kicks in to cover the costs, including…
- Lawyer's expenses.
- Costs for witnesses.
- Damages paid to the injured party (through a settlement or judgment).
GL also covers injuries you may cause to clients, vendors, or other people your interact with who aren't part of your business. For instance, if a client is injured after tripping over the network cable you're installing, they could sue your
As an IT professional, you're often working on other people's property and the contracts you sign may specify that you need General Liability Insurance in order to cover accidents at those location. It's important to note, though, that
GLI will typically not pay for damage you may cause to clients' computer hardware or other devices while they're in your possession or while you're working on them. For that you need Property Insurance.
Next: Property Insurance: Protect Your Equipment, Gear, and Office Space and Clients' Property in Your Care.