management consultant indemnity insurance professional
Whether your speciality is efficiency, sustainability or cost savings, the job of a management consultant can be a challenging and rewarding role. It can also involve taking on a wide variety of projects at different levels and at times can mean making recommendations and decisions which could make or break a client’s business. While most assignments and projects may go to plan, there will inevitably be some that don’t, and this is why management consultant insurance can be a useful safety net in certain circumstances.
If a client follows a consultants advice but later decides what they were told was of no use or actually lost them money, a client could ask for their money back or worst still, could launch a legal challenge and a claim for compensation, particularly if they feel their profits have been hit as a result of the advice.
Management consultant insurance can be bought which includes professional indemnity cover, a form of insurance which pays out for the legal defence of a case following a real or perceived mistake on the part of the consultant. The normal definition covers allegations of mistakes, errors, omissions or acts of negligence.
Court cases which arise when a client is not happy can be expensive as even the most invalid of claims will have to be defended properly. If a case is lost, and the claimant is awarded compensation by the court, there could again be a considerable bill to pay.
Professional indemnity as part of management consultant insurance would pay both the cost of compensation and the legal cost of defending a case, providing the combined total is within the defined policy limit. Beyond the policy limit any additional cost will be up to the policy holder, so it can be important to select a deal which is appropriate to the size of the business. So a company involving one individual freelance and a small handful of small to medium sized clients may want protection for hundreds of thousands of pounds, while a much bigger firm might want protection for millions.
Deals can also include a handy extra known as retroactive cover – this can provide protection for defending a claim which arrives in future but which dates back to something which happened so long ago it occurred before the insurance was taken out, although the policy applicant must have no knowledge of the impending claim when they take out their policy.
Management consultant insurance is a type of cover used by vast companies with hundreds of employees and by individuals just starting out with a handful of clients. It is a potentially extremely useful way of getting out of a law-related tight spot which could otherwise see some firms fall into financial difficulty or even fold completely.
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