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| Liability insurance is cheaper than I thought by Commander Tansin A. Darcos 10/08/2013, 6:56pm PDT | ||||
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| The State of Arizona uses its own bid portal to post requests for bids for stuff it wants to buy. One of the things the Department of Corporations has put out is a request for a replacement web portal for its system for accepting customer registrations of corporations and LLCs plus related services like filing of documents related to their establishment or change in status, which is to a large degree a manual, paper-driven process.
The state essentially wants a way to handle the whole enchilada through a web portal, allowing registrants to enter data on-line, supply credit card or deposit information, allow people to get a certificate of good standing, copies of filed documents, etc., all as self-service. This is something the State of Colorado has had since at least 2007; the system Colorado runs is actually better than the two big states for incorporating, Nevada and Delaware have. You can set up a corporation in Colorado with three things; a web browser, a street address in Colorado and a major credit or debit card with $75. Fill out the form, supply the address where the corporation's registered agent is located, give your card number and in ten minutes, boom! you have a corporation or LLC chartered. Plus, Colorado allows something I've not seen with any other state. A corporation or LLC can be its own registered agent. Well, anyway, apparently without knowing about Colorado's system, the State of Arizona wants to do something similar to what Colorado already has. And what's interesting is that Arizona will need something to handle the fact that while corporations and LLCs are chartered with the Department, fictitious names and state trademark and state servicemark registrations are made with the Secretary of State. (Colorado's Secretary State does trademarks/servicemarks, fictitious names and corporation/LLC charters.) So they are going to require that the provider of their solution be able to interface with the system run by the Arizona Secretary of State to query their databases to check new corporations against existing trademark or tradename registrations, as well as train employees in use of the new system, so it can't simply be a software shipment, it's going to require customization and training, which means a vendor will have to be onsite there. This means in addition to having contractor employees be protected by Worker's Compensation, the vendor also has to carry liability insurance. The State of Arizona requires a policy with $1,000,000 in the usual protections, but also requires $2,000,000 general liability. From some place else I stumbled upon Hiscox, a business insurer that specifically handles liability for small business, especially technology companies like software developers. They cover things like claims of copyright infringement, patent infringement, damage to customer property, damages due to misconduct by employees and contractors, etc. Well, Hiscox's website can only provide a quote for insurance up to $1,000,000. I have to call their 800 number to get a quote for $2,000,000. Presuming I can get it. Sometimes you can only buy so much. When I drove, the mandatory minimum insurance coverage was $15,000/$25,000/$50,000 but I bought the maximum Geico would sell me, which was $300,000/$300,000/$300,000, because the difference in premium was $20 each 6 months. Some people have such bad driving or accident records they either can't get more than state minimum or have to go to high risk to get coverage at all. So the rate the woman on the phone at Hiscox quotes me for a complete business policy with $1,000,000 in coverage with $2,000,000 in general liability is $750 a year. To cover a contract potentially worth probably $100,000 that isn't bad at all, and if I had to get it I could buy it on a monthly basis. It's a little too big a contract for me to handle as a single-person software company, but at least I know if I find one that's within my capacity the liability insurance isn't as bad as I feared it might be. I was afraid it was going to be more like $2,000 or $3,000. If I could get it that high, that is. When Texaco bought Getty Oil, Pennzoil had an agreement to buy the company and sued Texaco for tortuous interference in talking Getty into breaking its agreement to be sold to them. A jury in the case of Pennzoil v. Texaco found in favor of Pennzoil and issued what was then, the largest judgment in a liability case: ten billion dollars. Well, Texaco wanted to appeal. Bad comes to worse, Texaco is a huge company, if it lost it could pay, but to appeal, Texaco must file a bond issued by an insurance company for twice the amount of the judgment. Only problem was that Texaco couldn't find anyone to write the bond. Or any consortium like Lloyds of London. In fact, if Texaco has stripped the entire worldwide capacity of the entire insurance industry it still could not get a bond for US$20,000,000,000. Using a precedent involving the NAACP, it was able to go back to the court and post a bond consisting of a billion dollars of its own stock as collateral for the appeal, since it was physically impossible for it to obtain a bond of the size of the original requirement at all. So I wanted to make sure, it's possible with the small size of my company I couldn't find a commercial insurer willing to write a $2,000,000 bond. But it was simply if I can afford it, and it's not as expensive as I thought it would be. |
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Liability insurance is cheaper than I thought by 10/08/2013, 6:56pm PDT  Fuck you Jonesy, I clicked over to this from the twitter link. NT by 10/12/2013, 8:05pm PDT You'll thank me when you obtain superior insurance at a better rate. by 10/13/2013, 12:28pm PDT |
