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I'm a web developer who has been a freelancer for a few years. I just now started a llc and I'm being told by some staffing companies that I need a 1 million dollar business insurance to work with some of the companies around my area. I know that some government jobs require a bond and for good reasons but what about ad agencies and small tech firms. Is it really necessary? Is this something common to have and realistic to get?

If so how do most tech start ups deal with this?

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3 Answers

up vote 5 down vote

I think you are mixing the terms here a little bit.

In the US you don't need a bond(Surety or Fidelity) in most cases you do need General Liability Insurance and Workman's Compensation Insurance. And yes it is really necessary and it is realistic to get. In PA cost me about $700/year for both.

The staffing house don't want to cover expenses if you get sued or hurt.

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Another point to add to everything you have said: some states are getting very aggressive with the 1099 vs W2 issue, so a 1099er holding certain business insurance policies helps when/if state comes after the company contracting this 1099er for a project to prove they should not be W2ing this contractor. – Apollo Sinkevicius Mar 25 '12 at 16:23
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Is it really necessary?

Depends. See:

I'm being told by some staffing companies that I need a 1 million dollar business insurance to work with some of the companies around my area.

What is your question. Want to do business with them - get insurance. Otherwise - don't do business with those companies.

Plus, what the heck do you complain about?

Ocne upon a time I needed a business insurance for a project - I think around 3 million USD or so. Was about 20 USD per month. Not even showing up on the cost side after rounding.

If so how do most tech start ups deal with this?

They do not because they don't do work for hire. Most tech startups are not selling their services but try to develop a product. You are not a startup. You are a web developer that tries to build an agency - something most people would not consider a startup by any means.

Most of the time I just get a contract that does not get me any liability. But then, I am not a web developer - in my area of expertise, getting someone is the problem. As web developer, getting customers is likely the problem.

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Our company contracts a web developer through his LLC. The web developer has general liability insurance to protect himself if someone comes to his office and is injured or his company is sued.

The only time he has had to prove his business is insured is to his landlord. He has no trouble contracting to others in the area.

Do you have a dedicated office?

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