Commercial Insurance options, satisfying a client that requires specific coverage?

[kyley]

Hi All,
First post here - thanks in advance for any help you can provide in this area! I started my second business (previously grew and sold one) about a year and a half ago and have never held insurance. This is one area I know nothing about and I have never felt the need to hold commercial insurance (with my previous and current company, there is very little risk in my work). Anyway, my company is a tiny digital ad agency (just me and some contractors, and I work out of my home) that develops ads for companies and places them on various publisher websites for the purposes of lead generation. I have a contract with a large client that's ready to move forward but requires a lot of specific coverages:

Commercial general liability w/ "AM Best Rating" of A-VI with coverage for personal injury, advertising injury, contractual liability, cross liability and severability. Minimum limits of $1,000,000 per occurrence and $5,000,000 in aggregate.
Umbrella policy (with the same requirements as above)
workers' compensation insurance (even when it's just me?)
an internet / cyber liability policy with coverage for network security liability, privacy liability, media liability, regulatory liability, and notification expense
errors and omissions coverage with a minimum limit of $1,000,000 per occurrence

I've worked in digital advertising for 16 years, but haven't had experience with a company requiring insurance like this. This client is very much ready to get started, but I'm afraid this hurdle may be too high to overcome. An initial quote for all these policies (even just the commercial liability insurance) is way more than I can afford - or at least more than I'm interested in paying (all the policies would take up 100% of current net revenue - that is to say, my salary)... I fear that even trying to negotiate with them on this issue is going to throw up red flags and make my company appear too small and unsophisticated for them (though I'm certain I can do great work for them).

So now to my questions!

How would you suggest I address this with the company? Might I have success in pushing them to completely remove this requirement? Are there compromises I can offer?
If I try to get some basic coverage, are there some options for really inexpensive insurance just to meet the client's needs (considering again that I really have minimal risk in my work).
Anything else I should be considering here? Are there other options I can look at?

On a related note, the contract also calls for "Access to records" including "all agency books and records as they may relate to the performance of this agreement, and Agency invoices, and supporting documentation pertaining directly to purchases of media." I don't want to make my records available to them - nor my invoices for publisher partners. Any suggestions on handling this issue? Thank you so much for your help,
Kyle

[Steve B]

Hi Kyle,

It sounds like you're dealing with a very large company with a lot of boilerplate requirements their Legal Dept. has required them to get of everyone. Most of the big contractors they deal with have been through this with them and other big companies and they will meet their requirements because it makes sense for these bigger companies. However, it IS reasonable for you to get them to see that it doesn't make sense for your company to get all this. You may run into a wall or two, but eventually you should get the right person so allow you to do business with them (although it may make sense for you to have some of these in place i.e. some general liability insurance).

I ran into a similar situation from the other side. I was an HR Mgr. at a large manufacturing company and I was in charge of getting the bathrooms remodeled. I would have never been able to get it done because we has similar requirements. Luckily, my company allowed some exceptions so I could hire some local small businesses to get it done.

[kyley]

Hi Steve, thanks for sharing your thoughts. Yes, you're correct on your assumptions about the company. I'll try to work on them and get them to understand that it doesn't make sense for us to have all those policies. If you or anyone else have other ideas on this, or thoughts on how to address it with them, I'm all ears! Take care,
Kyle

[nealrm]

I would work your way up through the levels. Talk with the local manager, then the district manager, then the district VP.... Someone should be able to wave those requirements. However, that doesn't means that anyone will wave them. Be prepared to walk away if the insurance exceeds the profits. (Or add the additional insurance cost into the quote)

[Freelancier]

I've also had a few companies with the same issues over insurance "just because" (that was the only reason that made sense).

If you're not working on their site, a lot of the requirements go away, because they don't have to worry about you destroying their stuff or causing a problem that kills people (yes, I've been in that situation as well, and having the insurance is required). If you work on their site, they want to be sure that you have insurance that covers them in case you mess up.

So you go to the person wanting to hire your company and ask them to push back up the chain, because your pricing does not include the $2000-$5000 per year necessary to cover their insurance requirements. Explain that NONE of your other clients have required this insurance because it's not necessary with what you do. That often does it. They just need someone high up enough to sign off on it. They could also come back and say "increase your quote to cover this cost", but that's less likely unless you will be on site for anything other than a sales meeting in a conference room.

Hope this helps. Most companies do indeed have these blanket requirements just because that's what's specified either by their legal department OR by their own insurance policies. But it only applies in certain circumstances and you won't know whether this is one of them until you push back and try to get a waiver.

[kyley]

Thank you both so much for sharing your input on this. It is very helpful. Freelancier, I think you're right that much of it simply won't apply. I'll push back a bit on those grounds. Also, I feel kinda dumb after my initial reaction because I found out the quotes were annual - not monthly! :) So of course that makes a big difference! While I'd still rather not be paying $2k per year in (mostly unnecessary) insurance, I can see paying some if it's required to get the business. So I'll push back and see if I can get it dropped, but if not, the circumstances aren't as bad as I thought.

What do you guys think about the "Access to records" part though? They want access to "all agency books and records as they may relate to the performance of this agreement, and Agency invoices, and supporting documentation pertaining directly to purchases of media." I don't want to make my records available to them - nor my invoices for publisher partners. Any suggestions on handling this issue? Thanks again!
Kyle

[Freelancier]

It sounds like they just want your records relating to the work you do for them, not in relation to anything you do for anyone else. Or am I misunderstanding the question? You can always set it up that your other relationships are considered "confidential" and that a purchase order or contract with them does not mean they can force you to break a confidentiality agreement.

[kyley]

Well it sounds like they want access to, for example, the invoices from my publisher partners for the ads I placed on their websites, for this partner company... I don't want to share things like that. I don't know if they're also wanting to see things like expenses and earnings from the campaign I'm running for them? Maybe they wouldn't ever really ask for anything like that and I shouldn't make a big deal out of this, but to me it's proprietary information on how I do business with my partners (on their behalf). Thanks,
--Kyle

[Freelancier]

Go ahead and ask them why they need that access. My guess is so that they make sure you pay for any ads you place on their behalf, so that they're not stuck paying you AND having to pay the media company. But that's just a guess.

[kyley]

Gotcha, I'll take that up with them. Thanks,
Kyle