[OSGeo-Discuss] RE: Insurance for contractors?

[Michael P. Gerlek]

I received a surprising number (+20) of responses to this, many off-list.  My unscientific summary is as follows:

* some people responded privately, indicating they do not have insurance and would rather I not
  publicize the issue lest their erstwhile employees suddenly take notice :-)

* in the US, sole proprietorship is the way to go for simple one-person, garage-based shops

* seems that a significant percentage of employers aren't going to ask and/or just don't care,
  and of those that do ask many will waive it if you explain you're too small to afford it --
  this is certainly the case for small employers (big employers may just make it a hard requirement,
  knowing they will have enough bidders that someone will meet the criteria)

* IEEE and possibly other such orgs offer professional liability insurance at "reasonable" rates,
  (for some definition of "reasonable")

* if you're a (US?) govt contractor, seems like you'll almost certainly need to have insurance;
  if you're bidding for contracts, things get messy fast

* and if you're doing contract work that seems to require it, just bake it in as a line item
  in the contract bid -- see if you can just pass the extra costs along

* for longer contracts, some employers will offer the option of taking you on as a temporary
  employee (which means you're covered by the company's policy)

* for some employers, having insurance might give you more "credibility" as a professional
  player -- but it also may be that as open source itself gains more street cred, this becomes
  less critical

* and, finally, like all insurance, the odds are overwhelmingly against you ever needing to
  have to actually USE it...


Here's a pretty typical response:

> Do I carry insurance?  No.
>
> Insurance adds significant administrative and financial overhead to a one man shop.  If you
> want the one man shop price, you more often than not need to be willing to go without them
> having insurance.
>
> If you think about it, this isn't a bad arrangement anyway.  You're not going to give the one
> man shop such an important thing that you're going to have to turn around and sue them are you?
> You're one man contract is for doing dirty things that you don't have time or motivation to do,
> not mission critical business work.  If you *are* having your one man contract do mission
> critical work, you have bigger problems than whether or not they have liability insurance 
> in my opinion.


The happy news is that I was able to (oh so gently...) push back to our accounting and HR departments on the insurance requirement, using the above typical response and the "prevailing evidence" I gathered from this thread showing that most of you don't have insurance and yet, happily, the sun still rises every morning.

Thanks to all who responded!

-mpg







> -----Original Message-----
> From: Michael P. Gerlek
> Sent: Monday, August 31, 2009 10:03 AM
> To: OSGeo Discussions
> Subject: Insurance for contractors?
> 
> In the past I've hired some people for contract or consultant work
> (both open source projects and more general stuff) -- generally these
> people have been independent, one-man shops found by word of mouth and
> reputation, as opposed to hiring someone from an agency.
> 
> I'm getting pushback now from the administrative side of my company
> saying that any contractor I hire needs to have proof of insurance.  I
> understand the legal reasons for this, but I'm wondering how many of
> you out there actually have business/contractors insurance?  Do
> companies you work for insist on it, or not?  And how many of you are
> formally set up as LLCs or sole proprietorships or such?
> 
> [while this is likely a US-centric issue from the hiring side, I'm
> interested in international responses too since I've hired some
> foreigners as well over the years]
> 
> -mpg