Do I need business liability insurance if the contract has a liability clause?

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Do I need business liability insurance if the contract has a liability clause?

Do I need business liability insurance if I’m a sole proprietor and the only contract I have specifically says that both parties are not liable for any damages as a result of the contract or associated services?

Asked on May 15, 2018 under Business Law, Maryland

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

YES!!!! Sorry to be so emphatic, but you definitely need the insurance--such a waiver of the right to sue you will not hold up under certain circumstances, such as if the other side can convince a court you committed fraud (lied to them) to get them to sign, or if you can be shown to have intentionally acted in some way causing them liability or deprive them of the benefits of the contract (you are not allowed to deliberately do wrong while denying the other side recourse), or if you breach (violate) the contract in some material (important) way, since such a breach would let the other side treat the contract as terminated entirely and escape all its provisions...that is, the contract only protects you if the contract remains in full force and  effect, and there are too many circumstances that can void or terminate a contract to rely on that. You  are a sole proprietor: that means that if they can get around the contract, *you* are personally liable--i.e. you own house, money in the bank, etc. is at stake. The contract certainly helps, but get the insurance, too.


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