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Ideas: Do you suggest protecting yourself with business liability insurance or by forming a corp.?

by Vrs
13 replies
I was thinking about how today's society loves lawsuits and I was just wondering - how much are we at risk for any of the services we offer?

Anyone had a bad experience in offline consulting or know of anyone who has?

How do we protect ourselves? With business liability insurance? By forming an LLC, or both?

I guess the disclaimer would be I'm not asking for legal advice - just opinions or personal experiences.

I love marketing and I really enjoy working wth business owners, and most of them are fair and level headed. But it would only take one, wouldn't it?

Anyway, what's your opinion? Am I worried about nothing or is it something you worry about too? How do you handle it?
#business #corp #forming #ideas #insurance #liability #protecting #suggest
  • Profile picture of the author MVF
    Hey,

    If you're starting out and low on funds for the moment, I wouldn't really bother incorp'in just yet, it's expensive and can take a while till everything is setup.

    What I do recommend is making sure that you make up a contract that states you are not liable if they don't get results. Only so much depends on you...

    I'm not sure what kind of lawsuits you're worried about, but make a list and see if there's a way to enter it into your contract. You don't really need a lawyer to go over the contract at first and I've noticed that if you have a simple one page contract that states everything in a simple way, clients are more at ease at signing up with you.

    Once you get rolling, then have a lawyer look over the contract if you must and start working on that LLC.

    From what you're describing though, I'd say your subconscious is just looking for reasons to push off taking action. ;-)

    If you give me more details, I could give you better advice. Additionally, if you want some good sample contracts you can find a few here on the WF forums or buy a good WSO from one of the offliners. Search for the Offiline Gold forum and you'll get a ton of info there as well.

    Good luck!

    M.
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  • Profile picture of the author mjbmedia
    Professional Indemnity (PI) insurance (at least thats what its called over here in UK) is your best bet plus maybe liability insurance if its not included in the PI package
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    Mike

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    • Profile picture of the author Vrs
      Originally Posted by MVF View Post

      Hey,

      If you're starting out and low on funds for the moment, I wouldn't really bother incorp'in just yet, it's expensive and can take a while till everything is setup.

      What I do recommend is making sure that you make up a contract that states you are not liable if they don't get results. Only so much depends on you...

      I'm not sure what kind of lawsuits you're worried about, but make a list and see if there's a way to enter it into your contract. You don't really need a lawyer to go over the contract at first and I've noticed that if you have a simple one page contract that states everything in a simple way, clients are more at ease at signing up with you.

      Once you get rolling, then have a lawyer look over the contract if you must and start working on that LLC.

      From what you're describing though, I'd say your subconscious is just looking for reasons to push off taking action. ;-)

      If you give me more details, I could give you better advice. Additionally, if you want some good sample contracts you can find a few here on the WF forums or buy a good WSO from one of the offliners. Search for the Offiline Gold forum and you'll get a ton of info there as well.

      Good luck!

      M.
      I don't really think I had any specifics in mind as far as a lawsuit. I'm just aware that there are a lot of them out there and was wondering what the best alternatives were to protect my family from any losses.

      It's probably not a bad idea to have some kind of clause in a contract like you suggest, just to make sure we're on the same page. I don't want to dwell on it or make it a hurdle for my client either so there's a fine line.

      As marketers our challenge is to get them excited about what we can do for them, while at the same time managing their expectations so they're not under any false impressions. And of course, to deliver the goods. I like the "underpromise and overdeliver approach myself.

      Thanks for your input, I appreciate it.

      Originally Posted by mjbmedia View Post

      Professional Indemnity (PI) insurance (at least thats what its called over here in UK) is your best bet plus maybe liability insurance if its not included in the PI package
      I'll take a look at that, thanks.
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  • Profile picture of the author WillDL
    You want to look into cyber liability insurance. I carry it personally, and the company I work for has a policy.
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  • Profile picture of the author Rus Sells
    I think Errors and Omissions insurance is more what's needed. This type of insurance should cover you should a client sue you for being incompetent.
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    • Profile picture of the author WillDL
      Originally Posted by Rus Sells View Post

      I think Errors and Omissions insurance is more what's needed. This type of insurance should cover you should a client sue you for being incompetent.
      Rus is correct. If you are worried about a client suing you you want E&O insurance. Cyber Liability protects you if one of your sites starts giving visitors viruses or get hacked and clients' private information gets stolen. My Cyber Liability has an E&O rider. You honestly might want to get both, they protect you from different things.
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      Occasionally Relevant.

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      • Profile picture of the author Vrs
        Originally Posted by WillDL View Post

        Rus is correct. If you are worried about a client suing you you want E&O insurance. Cyber Liability protects you if one of your sites starts giving visitors viruses or get hacked and clients' private information gets stolen. My Cyber Liability has an E&O rider. You honestly might want to get both, they protect you from different things.
        Originally Posted by Rus Sells View Post

        I think Errors and Omissions insurance is more what's needed. This type of insurance should cover you should a client sue you for being incompetent.
        I hadn't thought of either of these - thanks. (And I'd never heard of Cyber Liability)
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  • Profile picture of the author barache
    Some of my im friends have formed LLC for at least some form of protection, but from what I understand it's very limited. For example, if you have to sign personally or pledge assets personally, having a business entity won't protect you.
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  • Profile picture of the author fitz10
    I strongly suggest taking out Errors and Omissions insurance which really is not a large expense compared to the protection you'll get.

    Forming an LLC or S-Corp is always a good idea as it separates your personal assets from your business ones.
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    • Profile picture of the author Vrs
      Originally Posted by fitz10 View Post

      I strongly suggest taking out Errors and Omissions insurance which really is not a large expense compared to the protection you'll get.

      Forming an LLC or S-Corp is always a good idea as it separates your personal assets from your business ones.
      Thanks for responding - I appreciate it. I'll also look into the Errors and Omissions insurance.
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  • Profile picture of the author IdeaFool
    I personally advocate starting an LLC before conducting any business. The cost is inexpensive (in my state, it's $100.) You can find a good Operating Agreement template online for free (if the company is just you, search google for free single member llc operating agreement.) Then, go to your bank and set up a corporate account. Often the deposit is around $100.

    An LLC offers good protection as long as you NEVER mix personal assets with company assets. This rule must be adhered to without fail. I can give you some pointers on establishing small amounts of business credit without a personal guarantee to help with such things as office supplies and printing.

    Forming an LLC has a second benefit: It adds to your credibility, especially if the name of the company sounds big. Global Marketing Solutions, LLC just sounds better than Joe Bob's Web Services! Just a thought, and I hope it was helpful.
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    • Profile picture of the author Vrs
      Originally Posted by IdeaFool View Post

      I personally advocate starting an LLC before conducting any business. The cost is inexpensive (in my state, it's $100.) You can find a good Operating Agreement template online for free (if the company is just you, search google for free single member llc operating agreement.) Then, go to your bank and set up a corporate account. Often the deposit is around $100.

      An LLC offers good protection as long as you NEVER mix personal assets with company assets. This rule must be adhered to without fail. I can give you some pointers on establishing small amounts of business credit without a personal guarantee to help with such things as office supplies and printing.

      Forming an LLC has a second benefit: It adds to your credibility, especially if the name of the company sounds big. Global Marketing Solutions, LLC just sounds better than Joe Bob's Web Services! Just a thought, and I hope it was helpful.
      Very helpful - thanks. I'll look into it this week.
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  • Profile picture of the author Blogbods
    I think the protection that those in internet marketing or selling products online need is one that rarely seems to be blogged about. We face so many risks and any policy we get would need to protect us internationally, since people all over world are accessing our websites. I think Cyber Liability insurance is really about protecting the data we hold for our customers and making sure we don't send then a virus, etc. However, we would still need Professional Indemnity Insurance - in case anyone reads about one of the affiliate offers we're promoting (or selling) buys it, and decide it had cost them a lot/caused untold damage and promptly sues us.

    I think it's interesting that this area is rarely one talked about by internet marketers. (Google it and you'll see what I mean). I appreciate that most of us can't offer legal advice, but I'd be really interested to learn of your experiences and any thoughts you have on the type of protection required. There are a million blog posts letting people know how to start up a blog (find a host, choose a domain, etc, etc) but I could only find one that talks about how bloggers and other internet marketers should protect themselves! If you know of an Insurance provider that specialises in protecting web marketers or people selling online, it would be very useful to know.
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