What kind of insurance do business consultants need?
To help you out, we've put together a consultant's insurance fact-pack. It'll give you an idea of the coverage available, and why you might need it.
Sometimes called errors and omissions insurance (or E&O) for short, professional liability insurance is a must-have.
That's because as a consultant, you're a professional. Which means you provide a service to your clients, using your expertise.
Unfortunately, it also means you can be sued for negligence So, if you make a mistake, or leave something out, and it costs your client money, they could sue you.
In fact, you can be sued for negligence even if you haven't made a mistake.
Whether you're at fault, or not, professional liability insurance gets you an attorney and can pay your legal expenses. It also covers damages, if it turns out you're liable.
Without it, you'd have to find the cash to pay for all these costs yourself. Putting your business – maybe even your personal assets – at risk.
And, because you can get retroactive cover, you won't need to worry about past errors coming back to bite you, either.
General liability insurance covers claims against your business if someone gets hurt, or their property is damaged, and it's your fault.
So this is coverage you need if you visit clients, or they visit you.
Clients offer want you to have it anyway. Because it means they're not the only ones left holding the bag if someone sues them over something related to you.
And if you rent a room for a workshop, say, or a focus group meeting, the owner of the premises may insist you've got general liability coverage, too.
Repairs and replacements to someone's business property, if you damaged it.
Legal costs and compensation, if it was your fault.
General liability insurance acts as a reputation-restorer, too.
Say you're overheard making some not-so-nice remark about a client. It gets back to them and they sue you for personal injury. General liability insurance can get you a defense attorney. And can cover your legal fees, plus damages, if you're liable.
You might want to add business personal property insurance (BPP) to your general liability cover.
Because whether you work from home, or have offices elsewhere, it protects all the moveable stuff in your office. That includes your chair, desk, your stapler – even your potted plants.
It also covers your mobile devices when you're out and about. Which makes it particularly useful coverage for consultants, as much of your time is spent on-site with clients.
Not convinced you need BPP? Just think about it for a moment. Your cell and your laptop… they're pretty essential to running your business.
And when they're out and about with you, there's much more of a risk they'll get broken, or stolen.
Kind of tricky to run your business without a laptop or cell, isn't it? If you've got BPP coverage, it'll be business as usual.
Even if you only have one person working for you, you need workers' compensation insurance. It's the law in most states. If you don't have it, you'll be fined.
But there's a good reason for having it. And that's because the cost of workplace injuries to your staff, can cripple your business.
It's not just the loss of productivity. If an employee gets injured working for you and you don't have workers' comp insurance you'd have to come up with the cash to cover their medical and legal expenses. And replace any missed wages, too.
Workers' comp insurance covers medical bills, lost wages and legal costs. And no matter who's at fault, it can also protect you from a lawsuit.
Whether you're the leader of a public, private, or non-profit organization, you can be sued for mismanagement. If they're unhappy with the way you're running things, employees, shareholders, partners and investors alike can, and do, hold businesses accountable.
And you don't have to have a multi-million dollar business for the directors and officers to be sued over mismanagement, either.
In fact, it's the small firms with fewer assets who really need protection. Because their pockets aren't as deep. The cost of defending corporate lawsuits can be more than most private firms' net worth. The cost of judgments, financially crippling.
Directors' and officers' insurance can take care of these costs. Including your legal defense and damages, if you're in the wrong. So you can get back to business. Knowing you'll still have one.
Cyber risk insurance, data breach insurance, cyber liability insurance…they're all names for the same coverage. Coverage you should seriously think about getting.
Why? Because as a consultant, you electronically store confidential, personal data on your clients. You use email and you probably have a website, too. Which makes you a target for cybercriminals.
And if you think your firm's too small to be at risk, think again.
A whopping 85% of data breaches are at small businesses and 60% of these shut down within six months of the attack. But not because of the attack itself. Because of the enormous cost of recovering from one.
Cyber liability insurance can't stop an attack. But it does mean you'll recover from one.
Investigating a cyber attack and telling your customers.
Repairing and restoring your website, systems and data.
Any income lost if the attack stops you doing business.
Legal fees and damages if you're sued for losing a client's private data.
Not sure whether you need cyber insurance? Find out how strong your defenses are. Get yourself a free cyber check-up now. Just remember, that if hackers want to get in to your system, they can, and will.
Cyber liability insurance means you can, and will, recover.
As a general rule, you need coverage for your business, your clients, any staff you have and the equipment you use to work.
As for how much cover you need, it's safer to over-estimate. Lawyers' fees, damages, court costs – they can end up going through the roof.
If you're not sure how much to budget, check with legal counsel. Then, imagine the worst-case scenario and go for as much cover as you can realistically afford.
It's worth it. Having the right insurance doesn't just keep you in business when things go wrong, it safeguards your assets. Including your most important one – your reputation.
But every consultancy business is different. And that means your insurance requirements are, too.
So find a broker who gets this. And one who can customize your coverage to suit your exact needs.
InsuranceBee's focus is on providing a service to businesses like yours – independent consultants, freelance professionals and consulting firms. People whose specific insurance needs aren't met by traditional brokers.
You want coverage designed to suit the unique challenges you face in your line of work. We make sure you get it.
If you'd like to know more, check out InsuranceBee's policies for consultants. Or call us at: 978.344.4215.
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