Whether you own a small marketing consulting agency that performs most work remotely or a larger firm with a high volume of clients, there are a variety of risks that could arise in the course of your business. As a company that provides professional services and advice, it’s important to be aware of the possibility that you could be sued by clients who aren’t happy with the results of your services. If clients take action based on your guidance and find themselves losing money, they could sue you alleging that you were negligent with your work. Even if you are found innocent, defending a lawsuit is expensive. Beyond these professional risks, there are also common risks that could impact most companies, such as a fire that causes physical damage or an accidental injury that takes place on your property.

When you operate a business, it’s important to consider obtaining business insurance to provide financial protection in the event of an unforeseen incident. No matter how careful you are, lawsuits and physical disasters are common, and they could have a major impact on your company. A comprehensive selection of insurance policies can provide a financial cushion that will allow you to survive any unanticipated setbacks.

What insurance coverage do I need for my marketing consulting company?

While there are many types of coverage for companies to consider, these insurance policies are particularly important for marketing consultants:

Errors and Omissions Insurance

Many companies rely on marketing as a crucial way to drive sales of their products or services. When you provide businesses with professional marketing services and recommendations, you open yourself up to the risk of making a mistake that could damage your clients financially. If a client feels your work was negligent or failed in any way, they could sue for damages. Lawsuits can be financially taxing and time consuming, and even if you end up winning a case, the toll on your business will already have been taken. Errors and omissions insurance can financially protect your business from these risks by covering legal and defense costs, settlements, and any judgments against your company.

Example:

• Your consultancy creates a marketing plan for a client’s new product and recommends what regions of the U.S. to focus marketing efforts on. After the plan is approved, the company changes several key features of the product. Sales are far lower in the targeted regions than the client anticipated, and they sue you, alleging that your plan was inadequately researched. Your insurer would cover the lawsuit and any settlements.

Commercial Property Insurance

If an unexpected disaster damages your company’s physical property, commercial property insurance will reimburse you for the loss. This type of insurance is important if you own or rent your building or office space, or if you own valuable business property such as computer equipment, furniture, or artwork. Commonly covered perils include storms, hail, fire, vandalism, and water damage.

It’s important to note that even if you work from home or your company does not own or lease commercial office space, commercial property insurance is still important if you want to protect your business property. Homeowners or renters insurance will typically exclude business property, so you’ll still need commercial property insurance if you are working from a home office.

Example:

• A fault in your HVAC system causes a fire to start in your office building, damaging your HVAC system and causing smoke damage to your office walls, furniture, and artwork. Your insurer would provide funds to repair the fire and smoke damage and replace any damaged furniture and artwork.

General Liability Insurance

General liability insurance protects your company from claims of third-party bodily injury, property damage, personal injury, and advertising injury. This is an important coverage to consider if you ever host clients at your offices, visit them at their offices, or come into contact with other third parties such as delivery people or repair technicians. If someone who is not employed by you is injured on your property, or if one of your employees damages someone else’s property, you could be held liable. General liability insurance typically also includes a personal and advertising injury component, which provides coverage for a number of risks, including libel, slander, and copyright infringement.

Examples:

• Property damage: Your employees meet with a client to discuss a new marketing campaign that is being launched. While at the client’s offices, your employee accidentally knocks over a valuable and delicate piece of equipment, damaging it. Your insurer would cover repairs.
• Bodily injury: Your client visits your office for a meeting. The client trips and falls over a misplaced power cord, injuring his back. Your insurer would cover medical costs and legal fees if the client sues.
• Personal and advertising injury: Your consultancy creates a marketing campaign for a prominent public figure. In the campaign, your team uses images of celebrities that have supported your client in the past. Your team, however, failed to gain the appropriate permissions to use the celebrity imagery. Your general liability insurance would cover legal fees and settlements if you are sued.

Business Owner’s Policy

If you own a small or midsize marketing consulting firm, you may want to get coverage through a business owner’s policy (BOP). This type of policy can simplify your insurance choices by combining general liability, property, business income, and extra expense coverage into a single package. Since it provides a wide range of coverage, a BOP can help smaller companies avoid coverage gaps while paying a lower cost in premiums than they would if they bought each policy individually. Requirements to qualify for BOP can vary depending on the insurer, but commonly, your company would be required to operate from a physical business location, employ fewer than 100 people, and make less than $5 million in sales per year.

Example:

• Vandals graffiti the exterior walls of your office building. The commercial property portion of your business owner’s policy would pay for the graffiti to be removed.

Additional Coverage

• Media liability insurance is an alternative to errors and omissions insurance that may be necessary if your marketing consulting company participates in writing copy or creating public-facing designs for clients. When you create publicly visible content, there’s a higher risk that you could be sued for libel, slander, or copyright infringement. Media liability insurance provides coverage for these risks as well as typical errors and omissions claims.
• In most states, workers’ compensation insurance is legally required for companies with employees. It covers the medical expenses and lost income of employees who are injured or fall ill while working. It can also provide funeral and death benefits in the case of work-related employee death.
• Cyber liability insurance protects your company from financial losses resulting from data breaches, hacking, cyberextortion, viruses, and other cyber events. This is an important coverage to consider if your company relies on electronic data or stores personally identifiable information.
• Employment practices liability insurance protects your business if you are sued by current, former, or prospective employees who accuse your business of wrongful treatment. Common claims include discrimination, harassment, or other employment-related issues.
• Business income insurance will reimburse you for lost income and operating expenses if your business is unable to operate due to a covered reason, such as fire, storm damage, or other property damage.

Final Word

Purchasing the right insurance coverage can protect your marketing consulting firm from a variety of major risks. It’s important to consider your business’s individual needs as you choose insurance policies, whether it’s a need for cyber liability protection or coverage from professional errors or mistakes. Ensuring that your company has a wide range of insurance coverage can give you, your employees, and your clients peace of mind, knowing that if an unexpected catastrophe occurs, your company will be financially protected.