Insurance and LLC

I’ve created an LLC for my design services for tax reasons. One of my contracts is wanting to know if I have insurance. I understand they mean liability but where do I start for acquiring design/vendor insurance? This is basically to protect myself in the unfortunate event of a huge mistake during the design process.

I always put the liability on the client side in my contracts. They have the responsibility to test and approve my designs before launching it in the market. They have the responsibility to do all regulatory agency approvals (UL, CE, FDA etc.). As ID consultants we don’t make enough to have to shoulder that level of burden. I make them indemnify and hold me harmless me should there be a law suit. Otherwise I’d refuse the project cause one case going wrong could sink you as a small business.

You might be interested in the Association of Professional Design Firms (APDF) Contract Terms and Conditions for Product Designers.

Deals with things like liability and indemnification etc… and has the weight of being developed by the member firms and endorsed by IDSA.

Its money well spent IMO

I priced this out through a local insurance agent once, that insures homeowners and businesses alike. It was a basic policy at I think one million coverage, I showed them the contracts I used, gave them an example quote and definition of what ID is (because like so many business people they had no idea). They then sent it out to quote to a “re-insurance” agent they deal with, they quoted me $1,200. per year. I never got it because I could never bill enough to cover it, and I always try to get clients to indemnify me like “mpdesigner” writes. Hope that helps.

There’s no way you should have to shoulder the liability. The client needs to take ultimate responsibiity as they approve your design and tell you if they see issues with it. Afterall they’re the experts in their product field. I may get hired to design a washing machine but the washing machine maker client knows more about washing machine issues than any consultant and has to give me feedback. Also there are so many factors that go into a product outside of just the ID. You canmake a great design but the product uses some cheap materials at the factory you have no control of. Etc… Always have the client indemnify you of liabilities. Unless you’re making zillions off it, it’s not worth the risk of being caught in a legal trap. Lawyers and legal actions, not to mention litigation is super expensive. Don’t take that risk or shoulder that kind of burden/responsibility. By approving the design, the client is giving it their thumbs up. If anything goes wrong, it’s really on them. Good that you have an LLC or Inc. Otherwise the plaintiff can go after your personal assets.