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Discussion Starter #1
I'm fairly new to the business and notice that a lot of companies require E&O insurance along side general liability. What exactly is the difference and why is E&O so expensive? I haven't found a policy under $2500 yr.
 

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If your new to the business that is the reason you have found policies as low at you have. Once your annual revenues go up your premiums for the E&O specialty insurance will as well. There are only four that the big Nationals will accept (probably because they have streamlined their claims process againts contractors).
You need to weigh the amount of business you get from a client vs the out of pocket expenses they require to get it. We get around the insurance requirements because we refuse to become an "Independant Employee". We review each job before we accept it.
Word of advise, do not work as a sole prop. Not in this industry. Chargebacks and claims against your company will be against you personally and can ruin your financial future.
 

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GTX63 said:
If your new to the business that is the reason you have found policies as low at you have. Once your annual revenues go up your premiums for the E&O specialty insurance will as well. There are only four that the big Nationals will accept (probably because they have streamlined their claims process againts contractors).
You need to weigh the amount of business you get from a client vs the out of pocket expenses they require to get it. We get around the insurance requirements because we refuse to become an "Independant Employee". We review each job before we accept it.
Word of advise, do not work as a sole prop. Not in this industry. Chargebacks and claims against your company will be against you personally and can ruin your financial future.
Best thing I ever did GOING TO AN LLC a few years back. When the industry was good and profitable I was advised to do so and now AM GLAD. So invest in yourself and DO IT
 
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Discussion Starter #4
LLC is the first thing I did even before I had a single contract. I've been researching for years before I started my own business. After all the research I still have a million questions.
 

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I'm not an accountant/lawyer but from my understanding an LLC has to be setup very well to really save you from any liability. I was told any sort of comingling of funds, etc., would open you up for personal liability as well.

My accountant said I should be setup as a C-Corp, as that would have the best tax consequences. Haven't done it yet.
 
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Discussion Starter #6
there is a thread on here about insurance and it is pretty well described the reason for the E&O coverage/policy.

As the TV Commercial says "don't leave home without it"
 
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Discussion Starter #7
I believe the recent thread that FremontREO is referring to is this one:

Insurance???

E&O Insurance is usually more expensive than General Liability because the defense costs (legal bills) are higher due to there being more legal wrangling involved with respect to claims settlement.
 
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Discussion Starter #8
SwiftRes said:
I'm not an accountant/lawyer but from my understanding an LLC has to be setup very well to really save you from any liability. I was told any sort of comingling of funds, etc., would open you up for personal liability as well.

My accountant said I should be setup as a C-Corp, as that would have the best tax consequences. Haven't done it yet.
I became a sub capter s corp. this year , Was a LLC. The best I understand it is ,your protected personial and helps big time on self-employing taxes.
 
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