What protection does a policy offer?
In short, management consultants professional indemnity insurance provides protection to management consultant businesses in the event that they are sued and taken to court.

While we all do our very best to be professional, there may be times when a mistake occurs and these mistakes may be very costly.

Excellent book keeping may pay off
Whether you are running a small or large business, it pays to learn the skills of book keeping and documentation. Always ensure that any contracts have been well planned and you have made sure the client knows what your responsibilities are. You may wish to give careful attention to how you lay documents out and make a note of everything that you do for your clients. This might typically include detailing times and dates and exactly what you did. In the event of someone claiming against you this documentation may then be used to show exactly what happened and whether you did something that negatively affected your client.

Do providers all offer the same?
When you go looking for management consultants professional indemnity insurance, you may wish to bear in mind that not all insurance providers typically offer the same elements of cover.

For example, some insurance providers might offer higher maximum amounts if you were to claim, while some providers may give you what you perceive to be more for your money than others.

Typically a policy may protect you against the following, depending of course on the provider and the level of insurance you choose;

• slander and libel cases;
• public liability insurance may be included or you might need to pay more to have it added on;
• defamation of character;
• losing documents or data belonging to a client;
• dishonesty;
• accidental breach of confidentiality;
• infringement of intellectual property rights deemed unintentional.

When choosing management consultants professional indemnity insurance, you might be saving yourself from a lot of stress and financial worry if the worst were to happen and a claim were made against your company.

What are the risks of not having insurance?
If you have no indemnity insurance to rely on, your company may be exposed to claims made against it. If a customer decided to take you to court, you typically have to find the court costs and fees out of your own pocket. These may add up to several thousands of pounds when you add in compensation. With a professional indemnity insurance (PII) policy in place, this generally helps towards easing the costs.

What protection might a policy provide?
Management consultants insurance may typically provide protection against the following:
Professional neglect – If you are seen to have neglected your duties in business you may be looking at court action against you;

Breach of confidentiality – If you have signed a non-disclosure form when working with a company or individual, and you breach their confidence you may become a prime target for a court case. Even if you have not signed anything, you still have be very careful when discussing business with others;

Product liability – If you rent out or sell products as part of your business you are at risk if those products injure or even cause death, this part of an insurance policy provides protection for that specific reason;

Libel and slander – You may say something about a company or individual or quote someone and get it wrong without realizing it. In this case you might be taken to court for slandering them and this is where libel and slander insurance protects you.

Checking the benefits and small print
Before you rush into taking out management consultants insurance take time out to check the benefits of any policy and find out what limitations or exclusions may apply. For example, some providers might include public liability insurance as standard or you may need to add this on to the PII cover.

What is IT consultants insurance?
As an IT consultant you are typically dealing with individuals and companies who rely on you and your advice. If you were to give someone advice that causes negative implications to a business, you may potentially find yourself facing a claim for compensation and a court case. This typically comes with often substantial costs, but with professional indemnity insurance, you may get assistance - up to a set limit - to help meet your legal costs.

Losing clients data or documentation
As an IT consultant you are probably around a great deal of data belonging to various clients. If something happened to this data or paperwork, you may be taken to court. Again IT Consultants insurance is there to help you out financially.

Breach of confidentiality
You may accidentally cause a breach of confidentiality. The insurance policy may typically cover this event, which again might end up saving you a great deal of money as well as damage to your reputation.

Public liability insurance
If you have visitors at your place of business you may want to consider if public liability insurance is already included in your insurance. This form of protection typically helps to protect you against the financial implications of being sued if someone suffers injury or death whilst on your property. Some insurance providers may include it as a standard part of your cover, or it can often be an optional extra.

Choosing your policy
Of course insurance companies recognise that there are many different sizes of businesses - your company may consist of just two or three or it might be a hundred or more. With this in mind you may wish to check out that any IT consultants insurance policy you are considering is adequate for your company’s needs. Reading the terms and conditions thoroughly and speaking to your broker if you have any queries may be key to ensuring that you get the most suitable insurance for your business.

The benefits included in IT contractors insurance may vary depending on who you take the policy out with and the level of insurance you require. While this type of insurance is not typically compulsory, it may pay to have it behind you if the worst case scenario were to occur and you found yourself in a tight spot if a claim is made against you by a client for such things as loss or damage (see examples below). Without insurance you may have to find large sums of money out of your own pocket as owner of the company.

You may find that the policy typically protects against events such as these listed below. However, not all IT contractor insurance policies will offer all of these benefits and features. Some may come as standard or may be an optional add on or may not be available at all, so it may make sense to consult a specialist professional indemnity insurance broker:

• a loss of customer’s data or documents – as you are offering a service as an IT contractor insurance covering this loss may be a lifeline as typically you may be involved with data and/or documents;
• public liability protection – the insurance provider may include this in your policy or you may be required to add this on as extra. This part of the insurance generally provides protection in the event of a member of the public suffering an accident or loss on your property;
• breach of confidentiality that is accidental;
• slander and libel claims that may be made against you.

When taking out insurance always check the small print as there are typically terms and conditions and again these may differ based on your insurance provider.

In summary, while insurance may be perceived as another added cost, without it your company and business may be put at risk. If the worst scenario raised its ugly head you might be forced out of business if a claim for substantial damages is made against you and have no insurance behind you.

In some lines of work professional indemnity insurance may actually be compulsory. This might typically be the case for anyone working as an advisor, consultant or as an accountant in particular professions.

Many other types of business may benefit from taking out this form of insurance, even if it is not compulsory.
For example, some local councils may only work with companies who can show proof of insurance.

Events that may be typically covered in a policy
While every insurance provider differs in what they offer in their insurance policy you may find that a policy covers all or some of the following: slander and libel claims, professional neglect, copyright breach, confidentiality breach, making a statement that may be considered to be negligent or performing an action that is considered negligent on your part.

Go over the fine print
Just as it is important for you to ensure that any contracts you hand out to clients or literature detailing the work you intend to do are set out properly, the same goes for your insurance policy. Insurance policies may differ slightly in the cost of the premiums between providers, and they may also differ when it comes to the fine print. There are nearly always limitations on the amount you may be able to claim if needed, and exclusions typically apply. Finding out what you are allowed to claim for and what not before you pay for the insurance might save you problems in the event that you ever do need to claim.

Peace of mind
In short, professional indemnity insurance is there to provide peace of mind - if a mistake is made by you in your business that is covered by your PII insurance, typically you are not left to pick up the costs alone.

PII can typically provide cover for a wide number of professional occupations including:

• IT contractors;
• consulting engineers;
• management consultants;
• legal professionals;
• forensic consultants;
• photographers.

Professional indemnity insurance provides financial assistance in the event that a client or ex-client sues you to recover losses that they believe were caused, somehow, by you.

Typically this may be as a result of:

• unintentional intellectual copyright infringement;
• accidental breach of confidentiality;
• defamation;
• libel or slander;
• loss of documents or data;
• errors on your part;
• etc.

If the end result is that your client’s business has suffered financially or from a loss of reputation attributable to you then you may sued.

PII can cover the cost of damages awarded against you as well as legal expenses and fees (limits may apply).

For some professions e.g. legal, PII may be mandatory. Some clients may insist that you have PII even though it may not be a legal requirement for the services you provide.

Premiums will vary, depending on the level of income you have and the amount of cover you opt for.

A sensible approach to PII may be to opt for the most comprehensive level of cover you can afford. If very basic, you may have to find the shortfall yourself should a case for damages be awarded against you.

Over time, perhaps as the nature of your work changes or your business expands, it may make sense to revisit your level of cover to ensure that it still matches your needs.

Another point to remember is that if you stop working and cancel your insurance, your cover may just stop. The nature of your work may be such that problems may take some time to appear so you could still be at risk from being sued.

You may see this referred to as run-off cover.

In a similar vein, work carried out prior to PII being taken out may also need to be catered for. This may be known as retroactive professional indemnity insurance cover.

Wide cover

Professional Indemnity Insurance or PII typically provides financial protection for a wide variety of professions and professionals against the financial consequences of being sued by their clients.

It provides cover for a wide number of eventualities that may arise as a result of the services provided. These typically include:

• accidental breach of confidentiality;
• loss of documents or data;
• defamation;
• libel or slander;
• dishonesty by the consultant or their employees;
• unintentional infringement of intellectual property rights.

Any of these may cause financial or reputation loss to the business of the client, whose response could be litigation for restitution.

Without management consultants’ professional indemnity insurance cover, you may find yourself personally liable for any such awards together with legal costs and fees.

PII cover may typically provide this kind of protection;

• for you if you work on your own;
• for your business partnership;
• for any employees that you may have - though this would not extend to employers’ liability cover which you may need in addition .

Valued option

For many professions involving the provision of consultancy services, PII may not actually be mandatory.

However, clients may request that consultants provide their own cover. Even if they don’t though, in a competitive selling marketplace, potential clients and buyers may value a proposition that includes a comment about the existence of PII.

They may regard it as a sign of your personal responsibility and experience.

As a consultant, you may always endeavour to provide clients with exemplary work, to meet your commitments and achieve a successful outcome on each assignment.

Unfortunately in a high stress occupation, mistakes can and do happen though.

Making sure that you have the resources to cope with the financial consequences of any such mistakes may be that bit easier if you have the protection of management consultants’ professional indemnity insurance behind you.

That’s life

Whether you work alone or with a consultancy partnership, you may never be 100% certain that the consultancy services you provide for your clients are always going to go exactly according to plan.

Something unexpected may crop up that can be attributable to you through something that you did or failed to do. There may be consequences that result in financial loss or damage to the client

It may be rare today to find a client who reacts to such financial loss with a fatalistic - ah well that’s life - shrug of the shoulders.

Court cases

These days, clients may well try to minimise any losses by suing the people or person they think is responsible.

If this turns out to be you or your company, then you may find yourself in court defending yourself against a claim for damages.

This could be as a result of:

• negligence on your part, something you did wrong or didn’t do at all;
• unintentional breech or copyright or misuse of confidential information;
• libel or slander;
• legal liability for the loss, erasure or destruction of documents or data;
• a dishonest act by you or one of your employees.

Of course, if you have employees then you may also benefit from the additional cover provided by employers’ liability insurance in the event that your employees sue you on an employment related issue.

If a case is found against you, then the protection of management consultants insurance may cover damages awarded against you as well as legal fees and expenses.

Optional cover

For some professions, PII cover is a mandatory requirement.

While this may not be the case for management consultancy, whether you are a self- employed or operate as part of a small practice perhaps with your own employees, having the protection that professional liability insurance cover can provide may typically be a sensible idea.

Life can be stressful enough without having to worry about the financial consequences of being sued. Management consultants insurance may be able to offer you peace of mind, thereby allowing you to concentrate on what’s important.

How could that happen?

As an IT consultant, you may be responsible for giving advice and guidance on some significant spending decisions.

While the budget holders may all sign off on your recommendations, if there are problems later on, you may find that you’re held accountable.

Indemnity insurance

IT consultants insurance is a type of professional indemnity insurance (PII).

This provides financial assistance in the event that the client you are working for suffers damage or financial loss which can be attributed to something that you may have done, or omitted to do, in the course of providing them with your services.

As an IT consultant, negligence on your part may be more likely to cause financial rather than physical damage.

Some typical areas where PII for IT consultants may typically help provide you with protection include:

• accidental breach of confidentiality;
• loss of documents or data;
• infringement of intellectual property rights;
• defamation of character;
• allegations of libel or slander.

PII will typically also cover your legal fees and expenses, whether or not the case against you is upheld.

Optional extra

Indemnity insurance for IT consultants is not compulsory in the way it typically is for some other professionals like solicitors or financial advisors.

However, aside from the very real protection that PII provides, it may also demonstrate your responsibility and professionalism to potential clients.

In an environment where competition for work is fierce, having a few extra points in your favour may do no harm.

Continuity of cover

An interesting facet that may be worth consideration is that with many providers of PII, if you stop paying premiums your cover will stop. Nothing unusual in that, you may think.

The trouble is, the nature of your job is such that it may be that problems do not arise straight away.

So if you finish one assignment, decide to take some time off and cancel your IT consultants insurance because you won’t actually be working, you may have to make special arrangements (sometimes known as run-off cover) to ensure that you would still be covered for historical problems.

Why?

No matter how good you are at your job, if you think back over your career in IT, you may well be able to remember occasions when projects you were working on went wrong. Perhaps serious consequences arose for your employer.

If you were a permanent employee, you may have been protected from all of the financial consequences.

That may not be the case if you’re working as an external contractor.

Professional indemnity cover

IT contractors insurance is a form of professional indemnity insurance (PII).

It is not usually a mandatory requirement for IT contractors in the same way as it typically is for solicitors, architects, insurance brokers and the like.

It provides financial protection against claims by your client that your mistake, negligence or bad professional advice, have resulted in loss or damage to them or to their business.

They may know you didn’t mean any harm

In today’s harsh economic reality though, the chances that an unintentional error of judgment on your part will be overlooked with a shrug of the shoulders may be very slight indeed. Budgets are typically tight and there may be no slack available to rectify the position.

It may be all too tempting for a client to decide to sue you to try and get some redress for your actions.

Wide range of cover

PII can provide cover for a lot more than just faulty system design, missing deadlines or bad programming. It can also protect you financially if you are sued as a result of action such as:

• you losing your clients data or documents;
• defamation, libel or slander;
• a dishonest act on you part;
• you accidentally breaching clients confidentiality;
• infringement of intellectual property rights.

You may find that your legal fees, which may need to be paid even if no case is found against you, will typically be included as standard in the PPI policies of many providers.

All other things being equal

Competition for IT contract positions can be fierce.

Even though it is optional for your line of work, having IT contractors insurance in place may highlight your professionalism and maturity to potential employers and could help swing a hiring decision your way and help you secure that precious contract.