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3. Workers’ Compensation Insurance
Workers’ compensation insurance is required in nearly every state if you have employees. But your client may require you to carry this coverage even if your state does not. The reason: In some states, if you’re injured on the job, your client must automatically cover you with its own workers’ compensation policy. Additionally, in some cases, your client’s insurance carrier will bill the client to cover all subcontractors that don’t provide their own certificate of coverage. Both situations mean higher premiums for your client.
If your reseller services include installing hardware, you’re probably used to lifting heavy equipment and climbing ladders, and you know there’s always potential for injury. Workers’ compensation insurance covers medical costs, plus disability and compensation in the event of such on-the-job injuries.
If you have employees, workers’ compensation insurance makes sense. If you’re a solo practitioner with your own health and disability insurance, it may be redundant—but you may need it to get the work.
4. Fidelity Bond Coverage
Fidelity bond coverage is aptly described as employee dishonesty coverage, this type of insurance compensates your client if you or your employees steal money or property on the job. In particular, clients in the banking and financial services industries are likely to ask any IT contractors with access to the company computer network to carry fidelity bond insurance because they’re entrusting them with sensitive information, such as customer Social Security and account numbers.
Most self-employed IT professionals know that client information is safe with them. But if you have employees or subcontractors handling valuable property or customer information – no matter how much you trust them – anything can happen, and if it does, you could be held liable. A laptop could go missing, or a programmer working on a financial services network could steal banking customers’ account numbers and passwords to take money from their accounts. If that happens, fidelity bond insurance compensates your client for the missing money or property.
The moral of the story is that no matter your company’s track record in delivering service for clients, all it takes is one mistake—a foot through a ceiling, an error in your code or an unfortunate hire—to cause it all to crash down around you. If you understand your risks, however, and take steps to counter them, you can ensure your company will be around for the long haul.
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