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Posted on: July 23, 2020 by Huntersure
Consultants come in many forms, advising business clients, helping with design projects, or filling in online content remotely. But while they may serve their clients in various ways, all consultants can benefit from professional liability insurance.
Liability insurance is crucial to any successful and secure business. In fact, some consultants have probably even advised their own business clients to purchase professional liability insurance coverage.
As consultants serve their clients with business advice or creative work, they face the possibility of making an error that may present significant financial losses and consequences. To protect themselves against potential claims, consultants’ professional liability insurance can be the best resource for those unfortunate occurrences, protecting both business and personal assets.
Here’s a better look at why consultants need professional liability insurance.
The consultant industry has been rising steadily due to the expansion of online work and remote projects in recent years. While the spread of COVID-19 has impacted the consultant industry due to businesses cutting back on outside work, it is still poised to grow year over year.
Consultants face a wide range of risks simply because of their line of work. Professionals work closely with clients in many important aspects of their everyday business. As a result, consultants are usually privy to essential functions within their client’s organization. Even if it’s a small and innocent mistake, it may have a huge impact on the company’s operations. In this case, the nature of a consultant’s work usually puts them at a higher risk for a liability lawsuit than most other professions.
Marketing consultants may face the possibility of slander lawsuits, while those in accounting could face the chance of making data entry errors that end up negatively impacting accounts payable operations. While these are different situations, they can both end up in a lawsuit. The extent of risk and liability in a consultant’s work can depend significantly on the type of services they provide and the tasks they perform.
The risk they pose isn’t necessarily based on the probability of them losing a liability lawsuit, rather the prospect of a client bringing a liability lawsuit against them in the first place. The financial fallout of defending their services against a lawsuit can end up draining their funds, but by securing professional liability coverage, consultants can operate with peace of mind.
Commercial general liability insurance, also known as CGL, is useful to protect consultants if a client files a lawsuit claiming they caused the business interruption in service or financial loss. General liability insurance can also cover consultants for things such as a client sustaining an injury of some kind while in their home office. Or if an IT consultant spills coffee on a client’s network server, causing a shortage, this kind of coverage can protect them.
Professional liability insurance is also known as Errors & Omissions (E&O) insurance. E&O insurance is recommended if consultants provide professional services for a fee (i.e. accounting, IT, creative consultants). Professional liability insurance, or E&O, is meant to protect consultants if a client filed a liability lawsuit specific to how the consultant did not meet their professional obligations.
E&O insurance will safeguard their business against any claims for unintentional mistakes, violations of good faith, general negligence, and inaccurate advice. While it’s important for consultants to make good on their business promises and client expectations, avoiding claims as much as possible, operating with this coverage can provide a backstop to protect their finances, reputation, and future work possibilities.
Huntersure LLC is a full-service Managing General Agency that has provided insurance program administration for professional liability products to our partners across the United States since 2007. We specialize in providing insurance solutions for businesses of all sizes. Our program features can cover small firms (grossing $2.5 million annually) to large corporations (grossing $25 million annually or more). We make doing business with us easy with our breadth and depth of knowledge of E&O insurance, our proprietary underwriting system that allows for responsive quoting, binding and policy issuance and tailored products to meet the needs of your insureds. Give us a call at (855) 585-6255 to learn more.
Posted in: Consultants