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I've recently started contracting and I'm now on my second job and have just received the contract and there's a section I'm unsure about.

My first contract was through a recruiter, so I assume the recruiter had a contract with the company and I had a contract with the recruiter and following on this trail of thought I assume the recruiter had whatever insurance needed - however this time around I'm contracting directly to the company.

The contract states (I've shortened it a bit, this isn't word for word):

The company will be relying upon the contractors skill, expertise and experience; accuracy of all representations or statements made and advice given; accuracy of any documents conceived, originated, made or developed...and the Contractor hereby agrees to indemnify the Company against loss, damage cost, legal cost and professional and other expenses of any nature whatsoever incurred or suffered by the Company or by any third party whether direct or consequential as a result of such reliance.

Do I need to get some insurance? Is this a standard looking section from a contract? It sounds a bit intimidating!

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Answer these questions: If your workplace were to burn to the ground, how would this affect your contract with the company? Would you still be able to fulfill your contract? – Bernard Oct 20 '11 at 16:01
Either way, the safest way to go is have your contract looked over by a lawyer or at least someone with experience and understanding of such contracts. The contract should look out for BOTH your interests, not just the company's (as in make sure you get payed, not made wrongfully liable) – AJC Oct 20 '11 at 16:15
@Martyn I've changed the title of this question to be a little clearer. Please let me know what you think. – Matthew Rodatus Oct 20 '11 at 17:18
This sounds like one of those questions that would best be asked to a lawyer, maybe one that specializes in area (if you can easily find one near you). – FrustratedWithFormsDesigner Oct 20 '11 at 18:32
Hi Martyn, legal questions are off-topic here: you'll likely want to consult a lawyer. – user8 Oct 20 '11 at 19:29

closed as off topic by Mark Trapp Oct 20 '11 at 19:29

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4 Answers

up vote 2 down vote

If you are incorporated, you should have liability insurance for your corporation, without question.

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up vote 2 down vote

It sounds like the contract might be referring to professional indemnity insurance.

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up vote 1 down vote

The phraseology used says that you "indemnify" (will compensate) them if you make any mistake.

If such a bad scenario should occur, do you want to compensate the company out of your own pocket? If not, then you should get liability insurance. However, I am not a legal expert. Talk to your lawyer about that section to determine what kind of insurance and how much you need.

The freedom that comes from being a contractor is a great thing, but that freedom comes at the price of looking out for yourself rather than relying on someone else to.

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up vote 0 down vote

IANAL but I don't think it means you need insurance, I think it's typical boilerplate to cover their asses in the event you sabotage them or similar and cost them millions. It seems like common corporate BS in almost all contracts. I would not worry about it.

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1  
-1 for two uses of "think" and one use of "seems." There is no substantiation of your claims, which is not a helpful answer. The OP wants something concrete, not guesswork. – Matthew Rodatus Oct 20 '11 at 17:03

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