From errors and omissions coverage to data breach insurance, learn how to understand and purchase the right insurance for your consulting practice. Check out our comprehensive articles and resources to discover how you can protect and grow your business.
Business Insurance for Consultants
Types of Business Insurance for Consultants
What types of consultants need business insurance?
Business insurance can help protect various types of consultancy businesses, from small one-person shops to large consulting firms. Depending on your risk exposures, there are a number of specialty insurance types you may want to take a look at, from key employee insurance to valuable papers and records insurance. However, for most consultancies, you’ll likely need coverage for the basics, including protection from accidents or injuries, property damage, or lawsuits alleging failures in your professional work.
If your consultancy meets any of the following criteria, you should consider purchasing business insurance:
- You provide professional services or advice that you may be held liable for
- You meet with clients at their offices or your own
- You own or lease office space
- Your business owns valuable property, such as furniture, computers, or artwork
- You employ others
- You make use of digital networks, both public and private, for your work
- Your business owns or leases vehicles for business purposes
Business Insurance for Consultants by Profession
Why is business insurance important for consultants?
You may be held liable for damages arising from the rendering of or failure to render professional services.
Benefits: In consulting, your advice and expertise are what clients pay you for. If for some reason your services cause your client financial losses or damages, you may be held liable. While you may be well-intentioned, mistakes do happen and dissatisfied clients can hold your firm financially responsible. With the right insurance protection, like errors and omissions insurance, your firm can be financially protected in case you face lawsuits from unhappy clients.
Risks: Without the proper insurance protection, your company could be held liable for any costs associated with your professional errors or omissions. Judgements, settlements, and defense costs could cripple your business financially. Particularly for small consultancy firms, the right insurance coverage could mean the difference between continued business and closing up shop.
Clients may require you to carry liability insurance before hiring your business.
Benefits: Your business will work directly with other companies, and clients may want to know interactions are covered from all sides. Having insurance for your consulting firm can help your business stand out in a crowded market and show clients your organization is legitimate and can be taken seriously.
Risks: If you do not have a protection policy in place, your business is at risk when dealing with clients. If something goes wrong, and the client directly blames your business, legal action may follow. Without insurance, you will be picking up the entire cost of legal representation and any money awarded to the client from you.
Certain types of business insurance may be required in your state.
Benefits: In most states, companies are required by law to carry workers’ compensation insurance. Even in the safest conditions, accidents can happen, which is why insurance is a necessary solution. If an employee is injured while working for you, insurance will cover you financially as well as make your business compliant with the law.
Risks: Without workers’ compensation, your organization is wide open to financial loss should a worker get injured or sick as a direct cause of working for you. Moreover, multiple injuries could lead to financial losses that ruin your business. As many places make employee compensation part of the law, avoiding the coverage can land you in legal trouble resulting in penalties and fines.
