Benefits of Consulting Insurance Coverage Blog | Benefits of Consulting Insurance Coverage
Insurance Basics 03/31/20

Benefits of Consulting Insurance Coverage

5 Reasons Why All Consultants Need Insurance

Every day, consultants have to make expert decisions on behalf of their clients. Despite their experienced insights, consultants don’t always make the right choices—they are human after all. And even good choices can lead to unexpectedly poor results for a client.

Whatever it may be, consultant insurance coverage is there to give you some much-needed peace of mind. Discussed below are the top five reasons you need it for your business or consulting firm. 

But first, a quick recap on what types of consulting insurance are out there. 

What Types of Insurance Do Consultants Need?

So what insurance do consultants need to have? Whether a workplace injury occurs with relation to your services, or you make a mistake on the job, there are two common insurance policies any consultant should have:

  • Professional Liability Insurance This type of coverage will protect you in the event of lawsuits regarding services deemed negligent, unsatisfactory, late, or incomplete. This also covers errors and omissions as regards to expert opinion or advice that a client follows.
  • General Liability Insurance – This liability policy protects against customer lawsuits for property damage, bodily injury, and other common risks.
  • Property Damage Insurance – This covers costs associated with damaging another’s property.
  • Bodily Injury Insurance – This assists with the costs for another person or people are injured.

On top of policies protecting consultants from common mistakes and customer damages that occur on the job, consulting firms with employees should also consider the following:

  • Cyber Liability Insurance
  • Worker’s Compensation Insurance
  • Commercial Property Insurance
  • Business Owner’s Policy
  • Auto Insurance

Top 5 Reasons Why All Consultants Need Insurance

Now that your options are clear, why do consultants need insurance? Here are the five reasons why you should invest in consulting insurance: 

  1. Attracts Clients and Improves Your Reputation
  2. Protects from Client Lawsuit
  3. Protects from Employee Lawsuits and Property Damage
  4. Required by Law or Contract
  5. Peace of Mind

#1 Attracts Clients and Promotes Your Reputation

Your reputation as a consultant is enhanced if you have insurance, especially if it’s professional liability coverage. Clients are more inclined to spread the word about your business or consulting firm if they know you are adequately covered. Having a professional liability policy shows that you take errors, omissions, and mistakes seriously. In an industry run by word of mouth, this reputation boost is essential for success.

Clients will also be attracted to consultants with adequate insurance in other areas. For example, good cybersecurity insurance is recommended in case cyber hacks happen at your company. Lawyers filing suit will target whatever entity will most likely pay, and your client wants to know that in a case like that, you will be able to take on some of the financial burdens. For independent consultants, cybersecurity insurance will ease your client’s worries and help you get hired. 

#2 Consulting Insurance Protects Your Business From Client Lawsuits

Through targeted guidance, consultants use their savvy to improve client business or technological operations. Although they are hired for their expertise, consultants still face many risks when making decisions for a client—a simple error of judgment may lead to significant losses. These scenarios often lead to lawsuits that can threaten a consultant’s business and livelihood.

Professional liability insurance can help cover this risk. This insurance policy offers protection if consultants’ efforts backfire. For example, a social media consultant’s insight may lead to a decrease in brand presence on a target demographic. 

If their client sues them for negligence, professional liability insurance would have their back

#3 Consulting Insurance Covers Employee Lawsuits and Property Damage

Even the most innocuous workplace can be a potential risk. Whether it’s a spill on the floor or faulty wiring, employee injuries and property damage can happen to any business. For that reason, you need legal and financial protection in case you are held liable for any damages that occur.

Property Damage insurance covers expenses related to:

  • Customer injuries
  • Customer property damage

Note: Most states require you to provide some form of this insurance to your employees, by law. 

General liability insurance, on the other hand, covers any accidental damage made to third-party property. This liability coverage includes repair or replacement costs. Commercial property insurance covers your own property, the contents inside it, and any associated expenses.

#4 Most States Require Insurance For Consulting Businesses

Now this one is crucial. Sure, it’s important to protect your finances as a consultant, but without proper insurance, you may be at risk of some serious jail time. In almost every state, you are required to provide worker’s compensation insurance before you hire your first employee. 

In some states, like New York, this applies to part-time workers as well. In other states, you may only need this type of coverage after hiring a certain number of employees. Either way, having worker’s compensation insurance is highly recommended. Even independent consultants may consider purchasing a liability policy for themselves.

#5 Consulting Insurance Protects Your Business and Your Peace of Mind

We won’t be covering how much insurance is for a consultant in detail, but despite the costs associated with insurance, consider the risk of not having it. Already, consultants face day-to-day risks when they offer insights and guidance to clients. Without insurance, those risks multiply. If your insight leads to negative results or financial consequences, the client may respond with a lawsuit. 

A professional liability policy protects from these lawsuits, shielding you from overwhelming legal fees and defense costs. 

Closing Thoughts

Consultant insurance coverage is critical to both independent consultants and firms. Although it is easy to convince yourself that you can do no wrong, sometimes errors are made beyond your control. Consulting insurance is there to protect you as you put your best foot forward—and if you slip, you’re covered! 

Don’t let human error, unfortunate injuries, or unhappy clients stop you from performing your best. Consulting insurance has got you covered.

 

Sources:

Trusted Choice. Finding the Right Insurance for Business Consultants. https://www.trustedchoice.com/small-business-insurance/coverage-types/consultant-liability

Insureon. General Liability insurance for consultants. https://www.insureon.com/consulting-business-insurance/general-liability

The Hartford. Professional Liability Insurance for Consultants. https://www.thehartford.com/professional-liability-insurance/consultants

Savage and Greene. A General Guide to Business Liability Insurance. https://www.savageandgreene.com/wp-content/uploads/2012/11/Liability-Insurance-Guide-09-2012.pdf

Blog

Tips for protecting yourself and your business.

Insurance Basics

Why Your Business Needs Wellness and Fitness Insurance: A Comprehensive Guide

Insurance Basics

What Is the Cost of Gym Insurance?

Insurance Basics

What Insurance Do Consultants Need?

Insurance Basics

How Much Is Insurance For a Consultant?

Insurance Basics

Benefits of Consulting Insurance Coverage

Insurance Basics

Fitness Center & Gym Insurance: A Beginner’s Guide

Insurance Basics

Do Consultants Need Insurance?

Insurance Basics

Inside the Hacker’s Mind – Social Engineering

Healthcare

Pay as You Go Insurance for Healthcare Professionals

Healthcare

You Have Your Physician Assistant’s License: Now What?

Healthcare

Why Are You Still Buying Occurrence Malpractice Coverage?

Healthcare

What Does Malpractice Insurance Cost?

Healthcare

Physician Assistant Malpractice Coverage: A Practical Guide

Healthcare

Do Student Nurses Need Malpractice Insurance?

Healthcare

Ouch, You Hurt Me! Do Nurse Practitioners Need Their Own Malpractice Policy?

Healthcare

What Type of Insurance Do Nurses Need?

Insurance Basics

Understanding Insurance Terms: Back to Basics

Insurance Basics

What Does Professional Liability Insurance Cover?

Insurance Basics

Types of Insurance Available for Small Business Owners

Insurance Basics

Potential Small Business Risks

Insurance Basics

General Liability Insurance: How to Keep your Business Protected

Insurance Basics

Choosing a Business Insurance Provider: Everything You Need to Know

Insurance Basics

Business Insurance Plans – Do I Need One?

Insurance Basics

Benefits of Professional Liability Insurance