I got sued, with a contract.

Oh yes, the other good thing about the insurance is that your coverage amount normally can be applied to attorney fees so you can afford a really good one if need be.

I don't know VG. E&O is a good idea if you usually bill jobs in multiples of $10,000 or if you are a subcontractor on a much larger project. But if your average job is $5000 or less you'll may find that annual premium + deductible for E&O makes it impractical. And whether or not you have claims the premium never goes down.

I just quote E&) from www.hiscoxusa.com and got the following:

Monthly payment plan (no fees) $33.33Total payment over 12 months is $400.00
Annual payment$400.00

Professional Liability limits and deductibles

Aggregate limit
$1,000,000
Deductible
$1,000
Premium
$400.00/annual

I guess it's not a bad deal if your judgement is over 1k you could be covered nicely.

I'd be warry of that, I shopped long and hard (though reputable companies) and was unable to find anything for that amount that was nearly that cheap. A quick Google search returned this: http://www.reviewcentre.com/reviews67003.html

Originally Posted by Lowengard I don't know VG. E&O is a good idea if you usually bill jobs in multiples of $10,000 or if you are a subcontractor on a much larger project. But if your average job is $5000 or less you'll may find that annual premium + deductible for E&O makes it impractical. And whether or not you have claims the premium never goes down.

Its not that expensive, I pay under 1k a year for mine with a 2.5k deductible. Lets say that one of my clients decides to sue me because he feels my work caused his company damaged and loss of sales, this can stack up into huge amounts and end up making me personally liable despite the fact that I run a business. Even though it wouldn't be of immense use for a case this small it is still a good idea so I don't end up with a $xxx,xxx court order on me personally.

Thanks for the tip on the review.

@VillageGenius. What insurance are you using for that service? It sounds like a good deal and a good idea.

Originally Posted by daexec81 Thanks for the tip on the review. @VillageGenius. What insurance are you using for that service? It sounds like a good deal and a good idea.

I am with ACE, I bought them though techinsurance.

I was a district court legal clerk for 3 years up until this last September. Small Claims cases are something I handled. In our jurisdiction, attorneys are not allowed to represent parties in court for Small Claims, but that doesn't preclude consulting with one. Generally speaking, if the judge felt there was any justification to the complaint but no intent to do harm, half of what was asked for in damages would be awarded. (Some people know this up front and play the system so as not to pay full price for services they have contracted for.....) If the defendant failed to appear at the hearing, then full damages would be awarded, due to default by the defendant. Decisions can be appealed, and the case is then reviewed at the next higher level. If the defendant felt they were wronged, they could always file a Small Claims case against the person who contracted for the services as well. Again, this is all based on my experiences within the jurisdiction I worked in.

One other thing to consider for future reference might be to include an arbitration clause in your contract that requires that all complaints go through arbitration vice through court. This requires people to talk to one another to try to work things out. Since arbitration costs money, often, things can just be worked out without spending money on arbitration. This would be something you may want to swing past an attorney. Hope this helps!

About arbitration, I've looked into places that do it and they are not free, many will end up costing high $x,xxx to low $xx,xxx. Is there something I don't know about the costs of arbitration that would make it a reasonable alternative to small claims court?

In my experience, the cost to arbitrate is split between the two parties. If the person with the complaint doesn't want to incur those fees just to work out an agreement with the other party, then they will likely bypass arbitration and either try to work things out with the contractor, or decide it's more trouble than it's worth. A plus for a contractor is that agreements worked out in arbitration do not count as judgments. Having a legal judgement on your record can be bad for business down the road. Once again, consulting an attorney for advice on how to write the contract to head off trouble is advisable.

One other thought comes to mind. In our state you can do records searches online or at the courthouse. Lots of times, people considering doing business with others would run a records check on the other party. As a business owner, it may be worthwhile to run those checks on prospective clients to see if there is trend toward taking contractors to Small Claims Court. All you would have to do is to call the courthouse to see how to do a records check and they could tell you.

I guess the client just wanted his money back for some cost-cutting reason or something, otherwise, they could have asked you to revise the site until they are satisfied.