Independent contractors and freelancers make for risky business
Advertising agencies are fun, exciting and creative places to work. But they’re also very busy places, where the hours and workloads can be demanding and the time pressures tight. Often extra people and specialist skills are needed for a client’s project, and that requires the agency to call on resources outside its core team. This is most often done by outsourcing work to independent contractors to complete. Despite this, the agency itself still remained accountable and liable for delivering the total project, including the parts outsourced.
Business insurance with extended cover
A significant risk to the agency was what would happen if something went wrong with a project and the client required the agency to pick up any liability for the work completed. We arranged Professional Indemnity insurance to cover any financial loss to their clients, resulting from the work or services the agency had carried out. We extended this cover to include the agency’s liability from any act, error or omission of any independent contractors working on their behalf. The policy limits were also increased to a level that satisfied the contractual requirements of their clients.
What happens when you’re faced with a $3.5m claim?
Something did in fact go wrong with a project. Their client claimed for all costs, plus potential lost revenue from an event they believed arose from the non-performance of the agency in relation to the contracted work. The initial amount claimed by the client was significant, and we believe excessive at $3,500,000. Our client’s insurer first offered only $45,000, as they disputed that the majority of the loss was due to a breach of contract, not professional error or negligence. We worked tirelessly with a specialist from our business network to produce a counter claim. A final settlement was agreed for $160,000 and everyone avoided long and expensive court action.
From our clients
“When you need business insurance the last thing you want is complication and hassle. Meridian makes the process straightforward and simple, while also taking great efforts to understand your business, and get the right package at the best price.”Deryk Whyte, Consultant