Management Consultant Professional Indemnity Insurance can help protect your business
Although it might be what many management consultants thrive on, the profession itself carries an enormous amount of responsibility. A professional can sometimes have the future of a client’s business in their hands. A wrong recommendation can have serious consequences for the firm, and this means the job itself carries a certain amount of risk. Legal cases are a real and significant threat, if not a certainty, and as such many professionals in the sector opt for management consultant professional indemnity insurance – a form of insurance which actually aims to protect a business from the consequences of being sued.
A management consultant can take on jobs for clients which include strategy, structure and human resources issues. Sometimes they will be responsible for helping to form detailed goals and processes for a company, designed to help it improve its financial performance. This means an error in their advice could actually lead to part of a business failing and result in a company losing money, which is sometimes called a ‘financial injury’. The firm concerned may then seek redress through legal action – an expensive proposition for all concerned, including whoever must hire legal help to defend their cause. This is where management consultant professional indemnity insurance can help.
Such policies simply cover the cost of legal expenses incurred as part of a defence to a case following a consultant’s error or omission in the normal course of their work. To qualify for a successful claim the error or omission must be accidental and not deliberate, ie malicious. Other things are also usually covered, such as allegations of defamation through libel or slander or cases related to alleged breach of copyright or confidentiality. Should a management consultant lose important documents belonging to a client or damage them, this will also be covered.
Another handy element of professional indemnity cover involves compensation payments. Should a policy holder lose a case aimed against them and then face a payout to the complainant their insurer will also meet this payment on top of the legal expenses cover. Of course, certain limits apply, and these will normally affect the cost of the premium. For example a policy with £500,000 in total cover is likely to cost more than one with £50,000 in cover.
For any management consultant changing jobs or insurers, ‘run off’ cover is available, which provides an additional period after a professional stops trading or otherwise requires an extra bridge of time allowance. Such added detail can prove crucial in certain circumstances as legal cases can be stressful and expensive, if not thoroughly damaging for some businesses. Management consultant professional indemnity insurance can therefore help a company negotiate almost any sort of legal storm, in exchange for a straightforward premium. In the long run, such an expense could save some businesses thousands of pounds or more.
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