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Liability insurance quote
Thread poster: Preston Decker

Preston Decker  Identity Verified
United States
Local time: 01:11
Chinese to English
Dec 1, 2015

I've been given a quote of 28 USD per month for Errors and Omissions insurance in the US. Deductible of 2500 and coverage up to 250,000.

What's everyone think--reasonable, or can I do better?

Edit: Coverage is pretty standard and covers work performed worldwide but for suits brought in the US and Canada only.

[Edited at 2015-12-01 17:02 GMT]


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Kevin Fulton  Identity Verified
United States
Local time: 01:11
German to English
Read the fine print Dec 1, 2015

A colleague once looked into such insurance and found that any attempt on his part to ameliorate alleged "damages" made the coverage for the incident null and void.

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Sheila Wilson  Identity Verified
Spain
Local time: 06:11
Member (2007)
English
+ ...
But will they be? Dec 1, 2015

Preston Decker wrote:
Coverage is pretty standard and covers work performed worldwide but for suits brought in the US and Canada only.

I don't understand exactly quite how jurisdiction is applied - I'll cross that bridge if/when I come to it. But I know when I had a non-payment issue, the case had to be heard where my client was based, not where I'm based. I can't help feeling that any claim for damages may well go the same way. In which case you could have paid out for years and find you have absolutely no cover when it actually matters.


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Dan Lucas  Identity Verified
United Kingdom
Local time: 06:11
Member (2014)
Japanese to English
Sounds like a lot Dec 1, 2015

Preston Decker wrote:
I've been given a quote of 28 USD per month for Errors and Omissions insurance in the US. Deductible of 2500 and coverage up to 250,000.What's everyone think--reasonable, or can I do better?

Preston, I use Towergate here in the UK and pay about 115 gbp per year for similar coverage, which is about $230 compared to the $336 quoted. I would imagine you can do better than that quote.

Dan


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Preston Decker  Identity Verified
United States
Local time: 01:11
Chinese to English
TOPIC STARTER
RE Dec 1, 2015

Sheila Wilson wrote:

Preston Decker wrote:
Coverage is pretty standard and covers work performed worldwide but for suits brought in the US and Canada only.

I don't understand exactly quite how jurisdiction is applied - I'll cross that bridge if/when I come to it. But I know when I had a non-payment issue, the case had to be heard where my client was based, not where I'm based. I can't help feeling that any claim for damages may well go the same way. In which case you could have paid out for years and find you have absolutely no cover when it actually matters.

Correct, I'm essentially paying only for coverage with US/Canadian agency clients (because most LSP contracts expressly state that jurisdiction is the court governing their place of registration), which is why I'm a bit hesitant to take the leap for 28 dollars a month. This why I'm wondering whether 28 USD per month is good bang for the buck.


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The Misha
Local time: 01:11
Russian to English
+ ...
Here we go again Dec 1, 2015

Not even a single dollar per month gives you a good bang here. Or a dollar a year. This is a potential jurisdictional and technical morass that has been discussed on multiple occasions and so far I have not been able to see a single case of anyone actually having to avail himself or herself of this "protection," let alone of the insurance company actually making any payments under such coverage. The question is moot anyway since there's nothing this so-called coverage could possibly add to a clear statement in you own terms and conditions that under no circumstances will you accept liability in excess of any monies paid for a particular project. If a particular client doesn't like this, well, for all I care as a service provider, they can go elsewhere. Or go jump in the ocean.

Why you or anyone else would want to waste your hard-earned money on this is totally beyond me.

Disclaimer: I have only been in this business for about thirty years or so.

[Edited at 2015-12-01 18:15 GMT]


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Rita Pang  Identity Verified
Canada
Local time: 01:11
Member (2011)
Chinese to English
+ ...

Moderator of this forum
Not all of us are as well-informed, or know these things Dec 1, 2015

The Misha wrote:

Why you or anyone else would want to waste your hard-earned money on this is totally beyond me.

Disclaimer: I have only been in this business for about thirty years or so.

[Edited at 2015-12-01 18:15 GMT]


.... and that's why we ask the questions we ask on forums like this, where we know there are people out there who can offer a second opinion, or better yet, advice.

Glad you brought up your points, Preston, Dan and Kevin. I've been thinking about these insurance plans and while quickly browsing the terms, I wasn't sure if this was a necessary expense, given that it only covers a very limited geographic region. Plus, as Sheila has said, it then comes to down to where the agency is located vs. where I'm located, and all that.


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Preston Decker  Identity Verified
United States
Local time: 01:11
Chinese to English
TOPIC STARTER
RE Dec 1, 2015

Dan Lucas wrote:

Preston Decker wrote:
I've been given a quote of 28 USD per month for Errors and Omissions insurance in the US. Deductible of 2500 and coverage up to 250,000.What's everyone think--reasonable, or can I do better?

Preston, I use Towergate here in the UK and pay about 115 gbp per year for similar coverage, which is about $230 compared to the $336 quoted. I would imagine you can do better than that quote.

Dan


Thanks Dan, that's exactly the sort of comparison I'm looking for. I'll keep looking.


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Preston Decker  Identity Verified
United States
Local time: 01:11
Chinese to English
TOPIC STARTER
On the other hand... Dec 1, 2015

The Misha wrote:

Not even a single dollar per month gives you a good bang here. Or a dollar a year. This is a potential jurisdictional and technical morass that has been discussed on multiple occasions and so far I have not been able to see a single case of anyone actually having to avail himself or herself of this "protection," let alone of the insurance company actually making any payments under such coverage. The question is moot anyway since there's nothing this so-called coverage could possibly add to a clear statement in you own terms and conditions that under no circumstances will you accept liability in excess of any monies paid for a particular project. If a particular client doesn't like this, well, for all I care as a service provider, they can go elsewhere. Or go jump in the ocean.

Why you or anyone else would want to waste your hard-earned money on this is totally beyond me.

Disclaimer: I have only been in this business for about thirty years or so.

[Edited at 2015-12-01 18:15 GMT]


First of all, a disclaimer: I'm currently considering signing up for E&O insurance because having the insurance is a condition of a non-business related short-term loan I may apply for (as I'm self-employed, the lender wants to make sure that a suit wouldn't result in me being unable to pay back the principal). With that said, I'm also looking for a good deal because I may choose to keep the policy even after the loan is paid back.

The Misha makes lots of good points. However, one argument for keeping the insurance long term is obvious: to gain protection from a worst case scenario. Before this year I'd spent 3-4000 dollars over the last five years on travel insurance for my family and I without claiming any benefit, which some would consider a waste, but I sure was glad we had the insurance when my wife's emergency hospital visit a few months ago rung up a 6000 dollar bill.

As far as I can figure things, translators with assets are fairly vulnerable to a suit if someone cared enough to bring one. Even incorporating doesn't provide adequate protection, as some judges will allow the corporate veil to be 'pierced' if it seems there is no tangible difference between the business and the individual.

The concern about companies not in the US or Canada is a valid one, but if the odds of being sued by a US or Canadian company are minuscule, then they are doubly so for European/Asian companies (a cross-country suit being even more trouble for them). And, I could reduce this risk to zero by requiring that EU/China partners change the governing jurisdiction in our contracts to the US.

So I could probably justify the cost of the insurance based simply on personal risk--it works out to about 10,000 USD (tax deductible I believe) over 30 years at the rate I mentioned, or about 7000 at Dan's rates.

However, what's potentially the most attractive to me about E&O insurance isn't the reduction of personal risk, but rather the conferred business benefit. I've written before that it's senseless to accept limitless indemnity clauses without insurance, and as I don't currently have insurance I usually negotiate a maximum limit of indemnity into the contracts I sign. Negotiation over this probably loses me a client or two a year, and I think it's quite possible that the addition of one or two clients a year alone would justify 250-300 USD in E&O bills.

For the next couple of months it doesn't matter: I will sign up for E&O insurance short-term if I decide to apply for the loan. After that point we'll see, but I'm probably leaning towards keeping the insurance long term, especially if I can get closer to Dan's rate.


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The Misha
Local time: 01:11
Russian to English
+ ...
Ah, so you haven't told us the entire story. Dec 1, 2015

Preston Decker wrote:


Disclaimer: I have only been in this business for about thirty years or so.

[Edited at 2015-12-01 18:15 GMT]


First of all, a disclaimer: I'm currently considering signing up for E&O insurance because having the insurance is a condition of a non-business related short-term loan I may apply for (as I'm self-employed, the lender wants to make sure that a suit wouldn't result in me being unable to pay back the principal). With that said, I'm also looking for a good deal because I may choose to keep the policy even after the loan is paid back.
[/quote]

I guess one could imagine a truckload of reasons to want that insurance that are totally unrelated to the actual business you are in. Still, if you are taking out a consumer loan I'd say go elsewhere and find a source that isn't as picky. If it's a mortgage, then you may not have that much of a choice seeing how difficult it is to get one these days in this blessed country of ours (gee, thanks, Helicopter Ben!) In any case, look at the rate you are getting and the potential insurance cost as a percentage. The difference in different rates quoted may just be negligible against the total cost of the loan - especially if you plan on doing what some wise folks do here in NYC when leasing a new, expensive car: take out the mandatory full coverage, only to drop the fire, theft and collision part of it the next month, after they sign the lease.

The comparison you make with travel insurance is not valid, however. If you travel expensively, especially internationally - i.e., face higher travel-related risks - travel insurance, however expensive, may still be a good deal for you, even if you never get to collect anything. In the case of this "business" insurance, however, you are not taking the step in answer to a particularly high, or highER risk caused by any particular actions on your part. You are simply placating your paranoia. There's plenty of "good" paranoia in what we do and in life in general, and I have my own to spare. This here isn't "good" paranoia though.

Finally, it would be totally ludicrous to accept limitless liability even WITH insurance, especially if you are not getting any additional compensation for it. I also doubt the value of that "perceived" or "conferred" extra benefit or "good business name" the fact that you have insurance allegedly gives you here. On the other hand, I don't know the nature of your business, so who am I to tell? If you think it gives you something, then buy it, thinking of it as a business marketing (rather than risk management) expense and stick Mr. BO with the bill (as an allowed business deduction, that is). Just don't kid yourself that this is about risk management. If you have assets you worry about, look into putting them in trust. That would cover you against many more - and much more real - risks than this.

Finally, don't get me wrong. You look like a great, conscientious fellow and I wish you nothing but the best. If there's any questions you want to ask but would rather not in a public forum, feel free to drop me a private message. It would be my pleasure to share what I know.

Final note to Preston and everyone else: If you haven't done that yet, read the book by Nassim Nicholas Taleb "Black Swan" (or better yet, start with the first book in the series, Fooled by Randomness"). That will teach you a thing or two about risk and how to handle it properly.


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Charlie Bavington  Identity Verified
Local time: 06:11
French to English
Black swan? Dec 1, 2015

The Misha wrote:

I have not been able to see a single case of anyone actually having to avail himself or herself of this "protection," let alone of the insurance company actually making any payments under such coverage.

The famous "I ain't never seen it therefore it never happens" routine, eh?
From the link below, you might need to follow a further link or two and potentially read more than one post in a thread, since if memory serves, the original tale needed to be told in 2 parts to deal with some "I taught St Jerome when he was a schoolboy" merchants.

http://www.proz.com/forum/getting_established/274342-recommended_professional_insurance.html#2337574

The question is moot anyway since there's nothing this so-called coverage could possibly add to a clear statement in you own terms and conditions that under no circumstances will you accept liability in excess of any monies paid for a particular project.


First, as any fule kno, stipulating a thing in a contract doesn't make it so, particularly if a bad-tempered judge deems it unreasonable for a particular case. Second, unless you restrict yourself to birth and marriage certificates, sooner or later the opportunity is likely to come along for a subtantial project where the potential loss, even applying this cap, could still be considerable.

FWIW to the OP, pending a post by a resident in America with actual American insurance covering American clients, my cover cost 80 GBP and specifically excludes the USA, because UK insurers think you're a bunch of litigious bastards who would sue my arse off for the emotional distress caused by my failure to underline the title, or something

Disclaimer: I've been translating a week and a half and haven't left the house since 1993. On the plus side, I am using my real name.

[Edited at 2015-12-01 21:08 GMT]

[Edited at 2015-12-02 19:38 GMT]


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Dan Lucas  Identity Verified
United Kingdom
Local time: 06:11
Member (2014)
Japanese to English
We're showing our ages, Charlie Dec 1, 2015

Charlie Bavington wrote:
First, as any fule kno

Haven't seen that particular reference on a translation forum before!

Dan


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Michael Wetzel  Identity Verified
Germany
Local time: 07:11
German to English
about 200 EUR without the US Dec 2, 2015

Hi Preston,

I pay just under 200 EUR per year for professional indemnity insurance that covers the whole world except the US (presumably for the same reasons mentioned by Charlie). I don't have and don't intend to pursue any US clients, so that is fine with me.
However, my coverage probably ought to cost somewhat more, because I signed my contract seven years ago and I need to update my information with my insurer in case I actually need the coverage at some point.

I hope that Henry is okay, but it's good to see that The Misha has taken up the good fight. By the way, most of the threads including declarations by Henry that he knows of no single case of a claim include firsthand examples of claims and legal actions from ProZ translators.

As far as Terms & Conditions limiting your liability go: That depends on where you are. What The Misha describes is not valid in Germany, for example. Clauses of this kind (which universally limit damages based on anything [such as the amount paid for the service] except for the likely amount of damages that could reasonably be expected to result from a faulty product or service in the given case) are considered generally invalid in Germany (but you might get lucky with a judge and a plaintiff to lazy or stupid to appeal).


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David Lin  Identity Verified
United Kingdom
Local time: 06:11
Member (2013)
English to Chinese
+ ...

MODERATOR
Another comparison for you. Dec 2, 2015

Preston,

I paid £105 a year with Trafalgar in the UK that covers USA and Canada as well.

David


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Preston Decker  Identity Verified
United States
Local time: 01:11
Chinese to English
TOPIC STARTER
RE Dec 2, 2015

Thanks Michael and David for the numbers. If I do find a policy I like and sign up I'll post my numbers as well.

The Misha-- Thanks again for the thoughts and kind offer. Returning books at the local library today, and I'll check and see if Black Swan is in stock. Regarding the debate on the necessity of insurance, I fall somewhere in the middle. The arguments you make are very good ones, and although 20 dollars a month for E&O insurance may not seem much, taking this sort of risk averse approach to life almost ensures a host of other expenses (high coverage term life insurance, extra riders on health, dental and auto insurance, etc.) that really do add up over time. On the other hand, I believe there is value in reducing risk, and that while they are not perfect and may not cover everything one would hope, insurance policies generally do reduce risk.

So I'd say that as long as one is cognizant both of the fact that there is a very high probability that a purchased E&O policy will never actually pay out benefits AND of the fact that there is a tangible, albeit small risk posed to translators that can be somewhat mitigated by E&O insurance, the decision to buy or not buy E&O insurance really is a personal one that will be different for each individual.

With all kinds of insurance, the people I worry about are the ones who don't understand that insurance generally works as a partial, not total, reduction of risk.


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