Freelance Resources Home

FAQ Home

Insurance Notes

Last Page Update: Wednesday, February 27, 2008

Insurance Issues for Independents

CIC SIG Meeting, April 7, 1999

Panel Discussion with Paul Spangler, Donald Samuels, and Todd Michel  

NOTE: The STC Rocky Mountain Chapter neither endorses nor disparages these comments. Please see disclaimer.

Paul Spangler - Lead Analyst of the Life, Accident, and Health Section of the Colorado Division of Insurance. Paul manages analysts who act as consumer advocates to correct compliance problems within the insurance industry.

Topic:  Health and Disability Insurance 

Health Insurance

In 1994, health insurance requirements regarding small employers were reformed. Small employers are companies with 2 to 50 employees that each work 24 hours or more per week. The reform mandated that all small employers in Colorado be guaranteed at least Basic or Standard coverage by any insurance company that offers policies to small employers.

In 1996, health insurance requirements regarding self-employed individuals were reformed. To qualify as a business group of one (1), you must be in business for one year, generate substantial income from the business, and sign an affidavit stating that you meet these two qualifications. “Substantial income” is not clearly defined. If you meet these requirements, you (the business group of one) are guaranteed Basic or Standard coverage by any insurance company that offers policies to small employers.

Reform is currently in the works that would require the self-employed individual to work at least 24 hours per week to be considered a business group of one for health insurance purposes. The reform would also require that the self-employed individual be able to produce documentation to prove the existence of their business, rather then merely signing an affidavit.

Guaranteed health insurance products (Basic and Standard) can have high premiums. If you don’t yet qualify as a business group of one, look into individual insurance plans; you are also guaranteed an individual plan by any insurance company who offers individual plans.

Disability Insurance

Today’s disability insurance policies typically aren’t as good as the disability policies available 15 years ago, and disability insurance is not regulated to the extent that health insurance is. If you’re looking into disability insurance, be very clear about what the policy does and does not cover, and be very clear about what the policy’s definitions are for partial and full disability. For example, if you are disabled and unable to continue to work as a technical writer, you may not necessarily qualify for full disability benefits. If you can be trained to do some other type of work, you will only qualify for disability benefits for two years, then you have to get back to work.

Other Notes:

·        If you don’t currently have health insurance, look into it. Your health could change at any time.

·        Don’t be afraid to change insurance companies because you have a pre-existing condition; you may be guaranteed coverage in the small group market.

·        Read your insurance policies!! Read them and know what is in them.

Handouts:   

·        What Happens When Your Health Insurance Company Says No

·        What Rights Do I Have Regarding Health Insurance?

·        What Colorado Small Employers Need To Know About Health Insurance

·        Life, Accident, and Health Ready-Reference Subject Areas, including a list of Mandated Benefits

·        Colorado Small Employer Insurance Carriers

·        September 1998 Small Group Health Insurance Premiums for Colorado

Donald Samuels – Attorney, Vice President and Director at Ireland, Stapleton, Pryor & Pascoe law firm. Donald has 12 years of experience in intellectual property matters, and has previously lectured on false advertising claims for the State Bar of California and on copyright issues at the American Intellectual Property Association. He litigates cases involving copyright and trademark infringement, unfair competition, false advertising, and trade secrets.

Topic:  Uniform Commercial Code, Product Liability, and False Advertising

Uniform Commercial Code and Warranties

Independent contractors may be considered merchants under the Uniform Commercial Code (UCC), which is codified in Title 4 in the state of Colorado. The UCC is open to interpretation in each state. Article 2 relates to the sale of goods and implied warranties.

Note that software, web-based products, and online help might not be considered goods or products, but intellectual property. This is not a clearly defined area under the current article.

Under the proposed Article 2B, if your contract with a client does not specifically state that the client is responsible for all content within a document, called a disclaimed warranty, then an implied warranty may automatically be offered by you under the proposed changes to the UCC.

In the absence of a disclaimed warranty, the implied warranty requires that a merchant (independent contractor) warrants to its licensee (client) that there is no inaccuracy in information content that was caused by the merchant’s failure to perform with reasonable care. Reasonable care means taking precautions that your colleagues would normally take to ensure a document’s accuracy.

In the absence of a disclaimed warranty, if an independent contractor has a reason to know of the particular purpose for which the information is required, and if a client is relying on the skill and judgment of the contractor to develop suitable information, then there is an implied warranty that the information is fit for that purpose and the information will not fail to achieve the purpose as a result of the contractor’s lack of reasonable care.

To protect yourself, you should:

·        Disclaim any liability in the contract. State that the client is responsible for the content of the document.

·        Document your reasonable efforts to ensure the accuracy of the document, such as keeping track of who you spoke with, what you did to learn the product, what questions you have asked, who reviewed the document, etc.

Product Liability 

An independent contractor’s product (such as a user manual) could be considered defective if it contains inadequate warning or instructions regarding hazardous characteristics of the product. You could be liable if your manual fails to include steps to adequately protect the safety of the consumer, or if the instructions cause the user to misuse the product.

To protect yourself, you should:

·        Make sure that following your instructions does not cause problems for the user or the product.

False Advertising

Promotional materials must be true, or you could be liable for false advertising. To be liable for false advertising, you either have to know that the claim is false or misleading, or you should have reasonably known that the claim was false or misleading.

Overall Recommendations:

·        Know everything you can about the product.

·        Do whatever is possible to check on the accuracy of the information being provided by the client.

·        Obtain insurance. The law presumes that you can factor the cost of insurance into the cost of your services or have the company with whom you’re contracting obtain the insurance.

Todd Michel – Commercial Underwriter for the Chubb Group of Insurance Companies. His expertise falls in high-tech, bio-tech, and telecom commercial accounts.

Topic:  Commercial General Liability Insurance, and Errors and Omissions Liability Insurance

Commercial General Liability Insurance

Commercial general liability (GL) insurance protects the insured for liability arising from these exposures:

·        If someone injures themselves on the premises of your business.

·        If your sub-contractor fails to perform their duties.

·        If your product causes injury to someone.

·        If your services fail to meet their intended purpose.

·        Also covers any liability that you assume under oral or written contract.

GL insurance provides these coverages for the insured:

·        Bodily injury (for example, if you injury someone)

·        Property damage (if you damage a client’s property)

·        Personal injury (if you slander someone)

·        Advertising injury (if you defame a competitor)

·        Medical payments (for injured parties)

·        Fire legal liability (if you damage a your own leased office space)  

Most GL policies have a $1 million coverage limit for compensatory and punitive damages. But, if your product fails to perform its intended purpose and does not cause bodily injury, property damage, personal injury, etc., but instead causes loss of business, your GL policy will not cover you. In this event, Errors and Omissions insurance will protect you.

Errors and Omissions Liability Insurance

In the absence of physical damage, Errors and Omissions insurance covers claims arising from damage to intangible property or loss of use or business.