3 Myths about Insurance and Working with Clients

Myth #1: You Don’t Need Property Insurance Because You Work at Your Client’s Location and Use Your Client’s Equipment


Your property insurance needs will depend on the terms and conditions outlined in your client contracts. Some clients provide coverage for physical damages for work done at their locations, and some do not.

For example, imagine a contractor who repairs a client’s dishwasher but leaves the hose loose after finishing. Say the hose causes a flood at the client’s house; even if the client has flood insurance, the contractor’s insurance would most likely be responsible for covering the damages.

This is because insurance companies provide coverage based on who is responsible for a device or piece of equipment: if you are in charge or in control of the equipment, your insurance is likely responsible for covering any related damages.

Myth #2: You Need Insurance for Each Client Contract

In many cases, your business insurance will be sufficient for multiple client contracts. There are some exceptions, though. Fidelity bonds, for example, may need to be renewed for each new client, and contracts that involve high or complex risks may require supplemental insurance.

While it’s a good idea to verify that your insurance policies cover you for each new contract you secure, there’s a good chance you won’t need a new policy for every new client. Most policies define the services covered very broadly.

More likely, your insurance needs will change when you add new services, move the business’ location, or change the number of employees who work for you.

carpenter-shaking-hands-shutterstock_69876982Myth #3: You Don’t Need Insurance Because You No Longer Have the Client You Purchased it For

Insurance protects you as a business owner. While not every client you work with will demand that you have coverage, carrying insurance regardless of your client’s demands puts you in a better risk-management position.

More important, though, canceling and restarting coverage as you need it may trigger red flags at insurance companies and can make it difficult for you to get coverage in the future when you need it.

credit: smallbiztrends