When you’re in the business of providing operational and administrative help to organizations, you take on liabilities that have the potential to create major financial exposure. Insurance can protect your business and keep you focused on service excellence.
Liability Insurance for Management Consulting Contractors
Whether you provide financial, compliance, HR, tech or some other kind of consulting service, any errors or omissions you make could negatively impact your clients. You may also face sources of liability regarding your own employees. Liability insurance is available in different forms to help you with legal defense costs, investigation expenses and payouts to those who show they’ve suffered harm due to your consulting business. Here are the primary protections management consulting companies should consider:
Professional Liability Insurance for Management Consulting Contractors
Management consultants professional liability insurance covers claims that your work led to financial damage to your client. Also called errors and omissions (E&O) insurance, it covers negligence on your company’s part, such as missing a deadline for filing a form with a regulator or failing to follow all instructions given by a client. It also covers professional errors, such as miscalculations and poor advice that lead to client financial loss. It responds whether you are truly at fault or simply alleged to have failed in your professional duties, though it will not cover intentional misconduct.
Most consultants enter into a client agreement known as a Statement of Work (SOW). If the client claims that you failed to perform according to the SOW or missed stated deadlines, which is known as a breach of contract, professional liability insurance can protect you and your firm. With the complexity of jobs now being outsourced, all management consultants — even sole proprietors — should look into the protections provided by professional liability insurance.
Crime Insurance for Management Consulting Contractors
If your company handles a client’s money or securities or has access to such assets, consider employee theft insurance, which is commonly sold as a third-party fidelity bond to cover client losses due to theft by your employees. For example, imagine one of your staff steals from a client through fraud, forgery or embezzlement or walks off with a computer or other piece of property. A third-party fidelity bond would serve as crime insurance and pay your client back for financial damage done by your employee’s actions once the theft was proven.
Employment Practices Liability Insurance for Management Consulting Contractors
Your employees are entitled to safe and fair work conditions. If someone feels violated by discrimination, harassment, unfair hiring or firing, or a hostile environment, you could face an employment practices complaint, which can quickly turn into a lawsuit or regulatory action. These can be drawn-out, expensive claims. An employment practices liability insurance (EPLI) policy can help you with the legal fees and settlements or judgments as well as with regulatory investigation costs and possibly even crisis management expenses, if they are included in your coverage.
If you are placing your staff at a client’s workplace, talk to your insurance agent or broker about a third-party endorsement. It can protect your company if your employee on assignment at a client’s location is accused of harassment, discrimination or another employment practice violation.
Fiduciary Liability Insurance for Management Consulting Contractors
If you sponsor, help manage, or administer employee benefit plans, you likely need fiduciary liability insurance. It helps cover your company and employees who administer benefit plans if they are negligent in managing plan records, make a poor investment plan decision, or commit an error or omission on plan disclosures or information resulting in financial damage to a plan participant or applicant. Remember, you don’t have to be a named fiduciary to be brought into a complaint and need legal defense or settlement help. If your company or employees have decision-making authority over employee benefit plans, you may be considered a fiduciary.
Your employees investing or managing employee benefit plan assets for a client probably also need an ERISA (Employee Retirement Income Security Act of 1974) bond. It protects the plan in cases in cases of fraud or theft. It fills a gap left by fiduciary insurance, which doesn’t cover dishonest acts.
General Liability Insurance for Management Consulting Contractors
Almost all management consultants need this basic liability coverage, and it typically comes built in to business owners policies (BOPs) and program insurance for management consultancies. It covers the costs associated with injuries visitors sustain on your business premises as well as damage or injury your staff cause while on duty at the premises of others.
Cyber Insurance for Management Consulting Contractors
Cyberattacks are common across all industries these days, and small and midsize businesses are especially vulnerable since they often don’t have the resources to staff a large cybersecurity effort. Cyber insurance can be of great value if your management consultancy is hit by a hacker. First-party cyber insurance helps you recover from an attack that locks down or steals your data, while third-party cyber insurance helps pay for financial damage done to a client whose systems are breached, funds are erroneously transferred, or data are leaked as a result of your cybersecurity weakness. Such breaches often result from user error, so it’s important to go beyond insurance and train your employees who have access to the networks or hardware of clients how to detect and block phishing, impersonation, and fraudulent monetary transfer, change orders and system entry.
Workers Compensation Insurance for Management Consulting Contractors
Though management consulting is a fairly low-risk business when it comes to employee injury, most states still require your company to carry workers compensation insurance so if an employee gets hurt during the course of job duties, you have the finances for medical care, rehab and lost wages. It can be written to cover employees who work away from your primary offices and while at conferences or other off-site events.
Property Insurance for Management Consulting Contractors
While most of your business value emanates from staff services, your equipment and offices provide essential support. Commercial property insurance helps pay for repair or replacement of your building and its contents, along with equipment your employees take to their homes or to client offices or meetings, if you opt for such coverage.
Your policy most likely will cover fire, theft, vandalism, windstorm and water pipe bursts. If you lease your office space, your landlord is responsible for insuring the building, but you must insure any betterments you make to the space and any contents you want protected. Check your lease agreement to make sure you don’t have gaps in protection.
For flood and earthquake, you will need separate coverage.
Your property insurance can be enhanced with business interruption insurance and equipment breakdown insurance. Business interruption insurance provides an ongoing income flow if your business is damaged in a covered event and forced to close for a period of time. It can be written to also cover physical damage to a service provider, such as an electric utility or internet provider, that halts your operations for an extended period.
Equipment breakdown insurance can cover your computer servers, HVAC systems and other crucial equipment you rely on for your management consulting. It helps with repair and replacement costs as well as cash flow while you undergo repairs if your business is closed due to the mechanical or electrical failure of your equipment. If you opt for extra expense coverage, you may also be insured for costs associated with renting new equipment while yours is repaired or replaced.
Commercial Auto Insurance for Management Consulting Contractors
When business is conducted off-site, employees may use their own vehicles to travel from your office to their meetings or job duties. In those cases, their personal auto insurance might not cover accidents, and anyone they hit might look to your company for costs. A non-owned commercial auto insurance policy would be able to help in those cases. Coverage for personal autos is not part of a standard commercial auto insurance policy and must be added at your request. It likely won’t cover damage to the employee’s vehicle, but it will cover medical payments and repair or replacement costs for the party that was hit.
Talk to your insurance agent or broker about other protections commercial auto insurance can provide, such as liability when employees use rental vehicles. And if your company owns autos, you need a full commercial auto policy.
An Insurance Agent Can Help You Find & Choose From Policy Options
An independent insurance agent or broker can help you sort through your management consultant insurance choices, discussing not only coverages but also the dollar limits of insurance and surety bonds that you might need. You may find you wish to extend your limits of insurance by buying excess liability or commercial umbrella insurance. In some fields, this can be an affordable way to increase the coverage provided under basic policies. Your agent can also help you review your operations and your contracts to detect risks and gaps. Find a management consulting insurance agent near you.
Employment Practices Liability Insurance for Medical, Dental & Social Workers
Though workers compensation insurance will pay for recovery and lost wages of injured employees, it will not cover employee complaints of hostile or unfair workplace practices or environments. These complaints, which typically deal with discrimination, hiring, firing and mistreatment by bosses or co-workers, are very common and can get picked up by the government or aggressive attorneys. Employment practices liability insurance (EPLI) can help pay for your legal defense as well as settlements or awards you must pay to plaintiffs.
The best way to avoid such complaints is to have transparent, documented practices and to assiduously enforce rules against discrimination, harassment, and workplace mistreatment. An open-door policy without reprisals on complainants or an anonymous reporting line can be a good method of identifying, investigating and correcting problems before they turn into lawsuits. The medical care industry has a high employee turnover rate and a diverse cultural base, so training, documentation, monitoring, and correction need to be ongoing efforts. Do not assume that everyone comes in understanding expectations.
Excess/Umbrella Insurance for Medical, Dental & Social Workers
Liability claims on your healthcare practice can run into the millions of dollars. If you have a robust practice with many employees and patients, you function in the surgical, emergency, geriatric care or home health segments, or you are a sole practitioner who sees patients one on one, you may have significant exposure to liability losses that exceed the limits of coverage in your primary liability insurance policies. To increase your protection to levels that align with your risk, you may wish to secure excess or umbrella insurance. Excess liability coverage extends the dollar amount of protection you have in a single underlying policy, such as professional liability. Umbrella insurance can be written to do that for multiple liability policies at a time. Both have preset dollar benchmarks where coverage begins. These are called attachment points, and it’s important to make sure your underlying insurance has enough coverage to reach that dollar level so you don’t create a gap between the primary policy’s limit and the trigger amount for the excess or umbrella policy to start.
Get Help for Insurance for Medical, Dental & Social Services Businesses
An independent insurance agent can help you sort through the many risks and options you face in your medical, dental, or mental health practice. Your agent will ask many questions to discover your location, hours, number and type of patients, ownership structure, business property, and employee types and numbers, among other things. If you operate commercial vehicles for patient transport, you will need to come prepared with the type and age of those vehicles, information on your drivers, and locations and miles of operation.
Insuring a patient-care practice is a complex effort, but an insurance agent who is familiar with this industry can help you find coverages that will protect you from crippling losses and allow your business and employees to focus on your patients Find an agent that specializes in healthcare risks.