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Do I need insurance as a subcontractor?

Agency demands large professional liability cover? Negotiate the amount, who pays and proof, or accept a liability cap instead. Sample clause.

The risky clause

Subcontractor shall maintain professional indemnity and cyber insurance of at least USD 1,000,000 throughout the term and for 5 years after.

Why it is dangerous

High insurance minimums can cost more than the project pays. Ask for a figure proportional to the contract, a shorter tail and the option to reduce liability instead of buying cover. This is general information, not legal advice.

Safer clause to propose

Subcontractor shall maintain professional liability insurance of [AMOUNT] during the term, or alternatively accept a liability cap equal to fees paid if cover is not commercially available.

Message to send

Hi [Agency],

Could the insurance requirement be scaled to the contract value, or replaced by a liability cap at fees paid? Thanks, [Your Name]

Frequently asked questions

Why do agencies ask for insurance?

To make sure there are funds if a claim arises.

Can I negotiate the amount?

Yes. Link it to contract value and risk.

Related guides

• Can an NDA claim my existing contacts?
• What is a staff non-solicit clause in an agency contract?
• What notice should a subcontractor get on termination?
• How do retainer hours and rollover work?
• Can an agency withhold my payment for a client dispute?

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