Professional Liability Insurance for a few geotech jobs on the side per year

[geoman77]

I'm leaving my job soon to begin a PhD and will have the opportunity to do some small geotech design jobs on the side for a contractor I used to work for-- mostly ground anchor design and observing load tests on anchors. The total revenue from the work will almost certainly be less than $15k per year. Any thoughts on professional liability insurance? The contractor doesn't have any engineers in-house so they don't have E&O insurance, but I could probably use their general liability policy to cover myself. I don't like the idea of not having PI insurance with my stamp floating out there, but looking around it sounds like the minimum possible fee is several thousand dollars per year, which I could never afford to shell out in one chunk. Anybody out there in a similar position?

 

[geoman77]

Follow up question-- what do I need to do in terms of making myself a legal business? Incorporate? Start an LLC? What's the cheapest option?

 

[DST148]

Do not cross post but try providing a link on the forum - Engineering Business Practices & Issues.
You may get a wider response. Good luck!

 

[fattdad]

Get a business licence and conduct all work through the business. All checks should be made out to the business and deposited into a business account.

Your new-found business will have no assets. When you deposit your check, you'll have a taxible asset, so be prepared to pay FICA, federal and state taxes on these revenues (this is an end of year problem).

On the subject of professional liability: It'll cost you a lot of money and what are you protecting? If you get sued, they'll come after your company's assets, which will be whatever earnings you've retained in the firm. That's likely to be small.

Now if your client demands professional liabilty, you may want to avoid that client. (You are a good engineer, eh?)

Just a few thoughts.

f-d

¡papá gordo ain’t no madre flaca!

 

[flight7]

It'll cost you a lot of money and what are you protecting? If you get sued, they'll come after your company's assets, which will be whatever earnings you've retained in the firm. That's likely to be small.

This may not be true, depending on your local laws. If your business is not a corporation or LLC (and maybe even if it is), your personal assets might be at risk if your company's assets are not enough to pay off a judgment. If the potential amount of money in question is enough to keep you awake at night, you should check with a lawyer.

 

[fattdad]

Yea, you need to incorporate, that was part of step 1. I think your clients need to know the truth also. I'm not suggesting anything shady. I'm just saying for a few jobs a year (and for the likely savings realized to the client, there's a tradeoff. That tradeoff is the limits of your liability, which would be bound to the assets of your corporation.

Poverty is a great defense.

f-d

¡papá gordo ain’t no madre flaca!

 

[oldestguy]

One possible idea: Get the contractor to add you to his insurance with errors and omission add on. I'd also ask him to put you on the payroll, then he also is involved.

Going bare has some risks, but then being very conservative helps.

For these situations, when I started on my own, I passed all my assets to the wife and had a lawyer work up an agreement between us. All your billing should state the terms of that agreement and that, in no case, will your wife be sued in case of a claim. What the heck, now she can run off with all your money if she is of a mind to. That's a risk also. It worked for me with a major claim. She still stuck with me.

There are some things they cannot attach, such as pension funds.

I kinda doubt that incorporating will do any good, since lawyers can make black look white if they are any good.

 

[Ron]

Insurance for contractors and insurance for professionals providing engineering services are two distinctly different animals. Contractors cannot usually get E&O insurance unless they are also engineering firms. That will typically require that an engineer be an officer of the corporation so as to qualify it for providing engineering services.

"Going bare" is certainly an option. A low limit E&O policy (say $250k) would probably be appropriate.