How management consultant insurance could save you from unexpected legal bills
Even with all the planning in the world, mistakes do happen, and they can be particularly costly in a business environment. As a hired professional, a management consultant is expected to help a business grow and become more efficient. Depending on the tasks they are assigned, they may be required to increase profits or simply pass on some specialist knowledge to a group of employees. If a client feels the consultant has done a poor job, and worse, has caused them to lose money, they may seek compensation through legal action. Management consultant insurance which has professional indemnity attached is designed as a safety net against this eventuality.
If a consultant never did face being sued, they would need legal advice and possibly also a lawyer or solicitor to help fight their case. This is likely to cost a considerable amount of money, possibly running into thousands or even hundreds of thousands of pounds, depending on the circumstances. Even invalid claims have to be defended in court, and this is where a management consultant insurance policy with professional indemnity comes in. It effectively pays the legal fees you run up should you ever commit a mistake or act of negligence, or be accused of this, in your day to day work.
It will normally cover omissions, acts of negligence and general errors. No matter how genuine a mistake is, the company may decide to take action if they feel they have lost out because of it. Often disputes can be resolved amicably, and do not reach court, but when they do, they can be stressful, time consuming and expensive.
Management consultant insurance will also pay out should you have to hire help following an allegation of unintentional defamation. It also protects against things like it claims to have lost or damaged a client’s important data or documents. Should your business involve employees, who are accused of an act of dishonesty by a client, such as stealing or fraud, a policy will also pay out for protection.
Cover limits are agreed at the start or the policy, as insurers will not pay out indefinitely. Although you can normally expect a policy to even cover the cost of any compensation that might be awarded to a complainant, this will not be unlimited. The ceiling of a policy is agreed at the start of cover, and you need to consider what level of protection you need. Larger businesses will naturally probably need larger ceilings on their policies.
It is important to avoid being under insured, as any difference in the cost of legal help or compensation awarded will need to be picked up by your business.
Management consultant insurance can also be tailored to certain time frames, and will even protect against any future claims which arrive unexpectedly and date back to something which happened before the policy was even taken out. Should you be concerned about something turning up after your business has finished trading, you have changed insurer, or simply changed jobs, ‘run off’ cover can also be arranged to ensure there is no vulnerable period.
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