Choosing management consultant insurance
As a high-pressure job, the role of a management consultant can be both difficult and exhilarating. Quality training and preparation usually means everything goes smoothly, be it passing on new skills to a team of people or conducting an in-depth performance analysis for a firm. Mistakes are rare, usually because the nature of the business means communication breakdowns, misunderstandings and mix-ups are not commonplace. However, this is an area where a slip-up can be very costly indeed, and this is why many advisers take out management consultant insurance as a way of ensuring they have protection should the worst happen.
A problem can quickly turn into a crisis if a client realises they have lost money because of a mistake made by a management consultant. Some will be minded to seek compensation through the courts for their loss and this can mean a long and complicated legal case. A client may even choose to sue simply because they are unhappy and not because they have suffered a loss as a result of the actions of a management consultant. Unfortunately even these invalid claims will need to be defended, and this can lead to a big legal bill.
Management consultant insurance policies will not only pay the costs of defending a claim, they will also pick up the tab in respect of any compensation awarded to a client, up to limits set out at the start of the policy. Besides straightforward mistakes made on the job, cover will also be provided for other pitfalls such as libel actions following unintentional defamation, accusations of breach of copyright or confidence and even dishonest actions committed by a consultant’s employees.
Some experts working in the area will deal with high-level problems being experienced by high-profile clients. This can mean masses of responsibility and this can lead to a need for a higher level of cover. In this sense management consultant insurance can act in much the same way as other types of insurance. A policy holder must decide what amount of legal fee and compensation cover they want – be it £50,000 or £1 million, with premiums increasing accordingly.
Other extras which may or may not affect cost include whether public liability is included or not, and whether any tailored time periods are applied to the policy. These might include what’s know as ‘run off’ periods for consultants retiring, stopping trading or changing insurer. Another option is ‘retro active’ cover for any claim which arrives relating to an event which took place before the policy was even taken out.
Although risk is part of any job, it can always be managed and an insurance policy can help minimise the impact of an otherwise stressful and costly legal claim. This is why even smaller firms and independents choose management consultant insurance.
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