The 8 Insurance Coverages Every Business Consultant Should Have
The U.S. Bureau of Labor Statistics reports that in 2012, there were 540,440 management consultants working in the United States. By 2015, that number had increased to 614,110. The consulting industry is attracting a growing number of talented professionals. It affords those who work in this field the opportunity to apply their knowledge and expertise in order to influence the business decisions of companies in a variety of industries.
Tim is one of these consultants. He recently opened a small marketing firm in Chicago and promises clients that he can increase their share of web traffic and customer conversions through proven targeted marketing techniques. Tim wants to make sure that his new business is properly insured.
Whether you are a consultant who provides professional services independently, as an employee of a consulting firm, or as the owner of a consultation business like Tim’s, it is important that you protect your finances with the right insurance policies. Trusted Choice® agents can help you find suitable and affordable consultant insurance coverage.
Why Do Consultants Need Insurance Coverage?
There are a number of cases where consultants might need business insurance. In Tim’s case, consider what might happen if a marketing plan that he recommended produces a negative return on investment for his client and they sue him for the financial damages? What if Tim’s laptop is stolen and criminals gain access to his clients’ confidential information? Or, what if a client comes to Tim’s office for a consultation, trips over an unsecured area rug, and suffers a severe back injury that requires months of physical therapy?
All businesses have exposures against which they need to be protected. You can customize your consultant insurance policy package to meet the specific needs of your profession. You just need to be aware of the many options that are available to you.
Professional Liability Insurance for Consultants
Professional liablity insurance is also referred to as errors and omissions insurance. It is arguably the most important coverage that business consultants and management consultants can carry. As someone who has an influential role in your clients’ business decisions, you can be held responsible if your actions or recommendations result in financial losses, reputational damage, or other hardships for your client.
For example, Tim and his team might develop an online advertisement that is inadvertently offensive to a segment of the population. The offensive ad could go viral and incite people to threaten boycotts and post negative comments about his client on social media and in online reviews. This could create a large financial and reputational hit for the company Tim was hired to help, and they can sue his firm for the damages caused by this grievous professional error. Errors and omissions insurance is designed to cover professionals like Tim against lawsuits related to professional mistakes, failures, and errors in judgement such as this one.
As with all commercial liability insurance policies, professional liability insurance for consultants provides compensation for legal defense fees, court costs, and other financial damages related to covered events.
Protect Your Business from Additional Potential Liability Losses
Many consultants face liability risks beyond the scope of what is covered by errors and omissions insurance, particularly if they operate a consulting firm or operate as a sole proprietor or corporation. Because liability lawsuits can often be quite expensive—even if the courts rule in your favor!—it is essential that you have the right coverage in place. Your independent insurance agent may recommend policies such as:
- General liability insurance: This coverage can protect you if you have a home-based office or commercial space like Tim’s, and a visitor is injured or suffers property damage as the result of an accident. It is a basic part of every business insurance policy.
- Cyber liability insurance: Consultants often have access to confidential, proprietary, or high-value information. If you are somehow responsible for a data breach in the course of doing your job, the financial repercussions can be extensive. Fortunately, if you are covered by cyber liability insurance, you can minimize your business and professional losses.
- Commercial auto liability insurance: If the consulting work you do involves driving for business purposes, you run the risk that your auto insurance company will not provide all the coverage you need if you are in an accident while working. A commercial auto insurance policy can protect your business if it is sued because of injuries or damages caused by a motor vehicle accident.
- Workers’ compensation insurance: If you employ people as the owner of a consulting firm like Tim’s, this coverage may be among your insurance requirements. An independent agent can help you review the mandates in the state or states in which your business operates so that you can meet your legal requirements.
- Umbrella insurance: A major professional error, like Tim’s accidentally offensive advertisement, can result in an extremely expensive lawsuit. If you have a significant risk of major liability losses that could potentially exceed the limits of your policies, you may want to consider umbrella insurance. A policy can provide you with an affordable way to obtain extra liability coverage so that you are fully protected.
Cover the Commercial Property Used in Your Consulting Business
Some consultants own very little in the way of business property, and primarily use equipment and supplies provided by their clients. Others may own a lot of expensive equipment or may have office space or even company vehicles. Because consulting jobs can vary according to the industry you work in and the scope of your services, so too can your property insurance needs. Some coverage types you may want to discuss with an insurance professional as you are building a consultant insurance package include:
- Commercial property insurance: If you own a consulting firm or have a home office, this insurance can cover your business property. While a homeowners insurance policy may provide limited coverage for business assets kept in a home office, a commercial property policy is often a better option, particularly if you have a lot of expensive equipment, including computers, printers, and software. Tim’s commercial property insurance covers his office furniture, computers, décor, and supplies. An independent agent can help you assess your coverage needs and can make appropriate recommendations.
- Equipment coverage insurance: If you own important business tools, computers or other equipment that you use in the course of doing your job, you may find yourself in a bind if this equipment fails. Some consultants can benefit from buying insurance to cover these tools and machinery so that they can be quickly repaired or replaced without causing large financial losses. Tim’s team of consultants uses desktop and laptop computers, but he feels confident that he can replace these items easily if necessary, so he did not opt for this coverage.
Get Help Finding the Right Consultant Insurance Coverage
Whether you are simply looking for professional liability insurance for consultants or, like Tim, you want full commercial coverage to cover a consulting business that you own, you can benefit from talking to a Trusted Choice agent. These independent agents understand business insurance and the risks you face in your industry. They can work with you to find affordable coverage that is suitable for all your coverage needs. There are thousands of Trusted Choice agents throughout the United States. Find an agent near you to learn more about your various options.
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