Consultants use their expertise and know-how to help businesses and organisations achieve their goals and milestones. A consultant can be self-employed, a part of, or the owner of a consultant business. Businesses seek their advice on a variety of issues, ranging from management to sales, software to recruitment etc.
A consultant has to use their experience to provide their clients with actionable solutions that can improve their business. Even if you strive to do your best by your client every time, you still run the risk of making a mistake. If your advice causes financial harm to your client in any way, this could result in lawsuit. Consulting insurance policies help you protect your business by providing financial coverage when you encounter risks that are covered under your policies.
Why Do Consultants Need Insurance?
Consultants offer professional advice, strategies and can even be actively involved in making changes designed to benefit a business. Even though a consultant can do their best to ensure that they help their clients resolve their business problems, the possibility of their advice failing is also real. If this happens, and the client loses money or their business operations are impacted, then they can sue.
Being involved in a lawsuit can be expensive. For consultants, this carries the added weight of needing to protect your professional reputation. As a consultant, you need people to view you as an expert in your niche. A lawsuit that suggests you may have failed your client could look bad. At the same time, you’ll also need to make court appearances, pay legal fees, attorney costs, defence fees, and other expenses.
Altogether, this can negatively affect how you run your consultant business. Insurance provides protection in the form of financial coverage. The fees associated with your legal battle can be paid for by your insurance carrier, up to the amount stipulated in your policy. Insurance policies can cover a wide range of scenarios, Most states in the US also require you to have workers compensation insurance policy, if you hire even one employee.
These range from professional liability to cyber insurance. Here are five insurance policies that cover the most common risks faces by consultants:
1. Professional Liability Insurance
Consultants can make errors and mistakes. Even if this is unintentional, the client may still sue. Some clients also require you to have professional liability insurance in place before they will agree to hire your services.
This is due to the nature of consultancy work. Predicting the future can be tricky, and sometimes, even your best effort may fail deliver the desired results. Protect your client from financial harm, as well as yourself from having to pay out exorbitant amounts both to your client and the legal system, with this insurance policy.
Professional liability insurance provides coverage against errors, mistakes, misrepresentation, negligence and malpractice. It also helps you protect your professional reputation, and can lead to such lawsuits resolving earlier.
2. General Liability Insurance
You can protect your business against potential risks such as property damage, or accidentally hurting someone, with general liability insurance.
Say your client visits your office one day to get the latest updates from you. As they were walking towards you desk, they tripled and fell due to an exposed wire. Due to this fall, they ended up breaking a leg and needing to be hospitalized. Such a situation can easily result in a lawsuit.
If you end up causing any kind of bodily injury, or damaging your client’s or a third party’s property, then general liability insurance protect you. This insurance policy covers legal costs as well as medical expenses for the aggrieved party.
You can also get protection against slander. If you end up saying anything that misrepresents the clients business, then they can sue. Your general liability insurance policy will also cover this scenario.
3. Cyber Insurance
Consultants are increasingly turning to digital resources to improve business operations and processes. Consultants are becoming reliant on digital software and hardware to connect you to your employees and clients, store valuable data, and help you run your business. This makes them vulnerable to certain risks.
These include your computers, tablets or other devices becoming affected with malware, viruses, or being attacked by hackers who demand ransom. If valuable client data is lost, your business could face a lawsuit. Cyber insurance helps you protect your business against digital threats. Your insurance carrier may also help you get your business back up and running again.
4. Business Owner’s Policy
Also known an BOP, this insurance policy encompasses various insurance policies in one bundle package. It includes the business insurance policies that business owners most commonly need. They usually include general liability insurance, business income insurance and commercial property insurance.
You can also personalize your BOP to include other policies you need.
5. Workers Compensation Policy
Needed in most states in the US, this protects employees who get hurt or fall sick due to work. It covers medical expenses, can ensure partial recovery of wages, and helps the employee through their recovery process.
These insurance policies can help you protect your consultant business. If you want to learn more about business insurance for constants, then click here.