Legal cases might be more associated with solicitors, architects and private doctors, but the reality is that anyone who offers their professional advice for a living may also want to consider their legal liability. In recent years this has become relevant for the likes of graphic designers, advertising and marketing and PR agencies, and all sorts of independent consultants. Interim managers also fall into this category as there is the chance that they may face a significant legal challenge in the event that an assignment goes wrong and a client blames them for a loss of profit. But there are options and interim manager professional insurance is a straightforward form of cover which can guard an individual or firm against some common pitfalls.
Interim manager professional insurance will often include professional indemnity insurance, often simply referred to as PI or PII. This normally covers you against claims for loss or damage made by a client or a third party in the event that you make the mistake or are accused of making a mistake.
Because a hired consultant is expected to deliver a specialist professional service, clients may be minded to explore their legal options if they feel what you have done as part of a contract has been below the standard they expected or worse still has cost them money. For example, an interim manager might be hired to take over the department of a company which has been suffering following the resignation of its full time manager. However, should the assignment result in the department actually performing poorly and costing a client money, they may be minded to sue.
Interim manager professional insurance will even cover claims which are invalid. This means that the payouts are not conditional on the claim against you being approved by the court. Even if you lose a case, your legal bills and compensation will be covered, all the way up to the agreed policy limit.
Deciding how much protection you want is important when you take out the policy, as a payout limit which does not cover all your legal costs in the event of a case means you would have to pick up the difference. Interim manager professional insurance must include a limit which is appropriate to your business, so you can avoid being over or under insured.
Interim managers are hired by firms to take the reins of all or part of a business and make effective recommendations to solve a problem or improve performance. As such they have a huge level of responsibility and a duty of care to their clients. Even the most professional people in the business can sometimes make mistakes, however, a simple error or omission in a consultant’s work or advice could lead to financial loss for a client. Unfortunately this means an interim manager is at risk of being sued, and may face a big solicitor’s bill and possibly having to pay someone compensation. This means interim manager indemnity insurance is seen as an essential precaution by many people operating in the sector.
Indemnity insurance is designed to protect a business or individual if they face legal action as a result of a mistake or act of negligence committed during the normal conduct of their business. It involves a regular premium and will pay legal fees, up to certain limits, which are run up defending a case. Many local authorities and businesses actually require that an interim manager has such a policy in place before agreeing to work with them.
A policy will also provide protection should an interim manager face a legal accusation that they have committed defamation through libel or slander or that they have breached confidentiality or copyright. An interim manager will often find that they must use and look after a client’s important data or documents. Should these be lost or damaged, resulting in a legal case, cover will again be provided via interim manager indemnity insurance.
Interim managers may be concerned about claims which arrive relating to past events, before a policy was taken out, or actions which are posted after a business is wound down or they retire. For these circumstances insurers arrange ‘retroactive’ and ‘run off’ cover respectively.
Even if a case is lost and damages are awarded to a claimant by a court, a policy will also cover these costs, up to a certain limit. Excesses may also apply, which will be pre-agreed and influence the cost of the premium along with the limits. Once in place, however, the right interim manager indemnity insurance can provide complete peace of mind for both consultant and client.