Bottom line: you may need liability insurance, and you have to pay for it.
The proposal has been funded, you are the named evaluator, you have created a detailed scope of work, and the educational institution has sent you a Professional Services Contract to sign (and read!).
This contract will contain many provisions, one of which is having insurance. I remember the first time I read it: The contractor shall maintain commercial general liability insurance against any claims that might incur in carrying out this agreement. Minimum coverage shall be $1,000,000.
I thought, well, this probably doesn’t pertain to me, but then I read further: Upon request, the contractor is required to provide a Certificate of Insurance. That got my attention.
You might find what happened next interesting. I called the legal offices at the community college. My first question was Can we just strike that from the contract? No, we were required by law to have it. Then she explained, “Mike that sort of liability thing is mostly for contractors coming to do physical work on our campus, in case there was an injury, brick falling on the head of a student, things like that.” She lowered her voice. “ I can tell you we are never going to ask you to show that certificate to us.”
However, sometimes, you will be asked to maintain and provide, on request, professional liability insurance, also called errors and omissions insurance (E&O insurance) or indemnity insurance. This protects your business if you are sued for negligently performing your services, even if you haven’t made a mistake. (OK, I admit, this doesn’t seem likely in our business of evaluation.)
Then the moment of truth came. A decent-sized contract arrived from a major university I shall not name located in Tempe, Arizona, with a mascot that is a devil with a pitchfork. It said if you want a purchase order from us, sign the contract and attach your Certificate of Insurance.
I was between the devil and a hard place. Somewhat naively, I called my local insurance agent (i.e., for home and car.) He actually had never heard of professional liability insurance and promised to get back to me. He didn’t.
I turned to Google, the fount of all things. (Full disclosure, I am not advocating for a particular company—just telling you what I did.) I explored one company that came up high in the search results. Within about an hour, I was satisfied that it was what I needed, had a quote, and typed in my credit card number. In the next hour, I had my policy online and printed out the one-page Certificate of Insurance with the university’s name as “additional insured.” Done.
I would like to clarify one point. I did not choose general liability insurance because there is no risk to physical damage to property or people that may be caused by my operations. In the business of evaluation that is not a risk.
I now have a $2 million professional liability insurance policy that costs $700 per year. As I add clients, if they require it, I can create a one-page certificate naming them as additional insured, at no extra cost.
Liability insurance, that’s one of the costs of doing business.