Choosing a management consultants professional indemnity insurance plan
The work of a management consultant can be high-pressured and high-profile. But it can also involve high rewards both financially and professionally. However, the job also carries a degree of risk along with the pressure. As a perceived expert in their field, a consultant is expected to do a job which delivers results, and if a client feels they have fallen below this standard, they can take legal action. This is why many people working in the sector take out management consultants professional indemnity insurance.
Professional indemnity insurance, sometimes referred to by insurers as PII, is a form of cover which typically pays out in the event the policyholder faces legal action. It is different to employers’ liability insurance and public liability insurance, in that it applies in the event the policyholder is sued due to a mistake which has cost a client money.
For example, the client may decide to take legal action because a restructuring programme drawn up by a management consultant has actually lead to the company losing money rather than saving it. This is often referred to in the business as suffering a financial injury and the aim of the client is to recover what they have lost through court action.
This will often mean hiring legal help to defend a case which can be expensive. Management consultants professional indemnity insurance will pick up the cost of the legal defence and even any compensation if it is awarded against the policy holder.
The benefits of this are obvious as in some circumstances legal bills can spiral out of control during a civil court action. Professional indemnity insurance will typically protect the policyholder whether or not the claim against them is valid and will even pay for the cost of compensation. Protection applies right the way through the courts system all the way to the High Court if needed, provided somebody stays within the policy limit.
This limit is set when the policy is taken out by the policyholder and companies which have large client lists and considerable turnovers may want protection for millions of pounds, while smaller companies will not need this.
It is also possible to arrange useful extras on a policy, such as an excess, or protection which will apply to any new legal claims which refer back so far they apply to something which happened before the policy was even purchased, known as ‘retroactive cover’.
Management consultants professional indemnity insurance is therefore seen by many as a crucial safety net and method of protecting against the considerable financial risks of a legal action. Premiums are priced according to the policy limit and can also be affected by the professional’s qualifications and experience, meaning a deal is available for every level of consultant.
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