Consultancy work can be both personally and financially rewarding, and many interim managers have successfully carved a niche in a growing market which is competitive but also thrilling for some professionals. However, some people operating in the sector, particularly those who have set up on their own, may be unaware of the extent of the legal risks they can sometimes run depending on the assignment and the client. Hired professionals like interim managers can be open to legal action if they make mistakes or are accused of doing a poor job. This is why interim manager professional indemnity cover is taken out by some people as a precaution against the unpleasant experience of being sued.
Indemnity cover applies not just to interim managers but to a wide range of consultants and hired professionals like graphic designers or other freelancers. In effect it covers the policyholder against the financial impact or facing a court case because of something they have done or have been accused of doing.
This kind of insurance typically covers against mistakes, errors, omissions, or allegations of acts of negligence. These can be formally launched because a client feels an interim manager has done a poor job or has made an error which has actually cost the company money, sometimes referred to as a ‘financial injury’.
Indemnity protection will pay your legal bills associated with getting advice to defend a case, and even covers the cost of compensation should it be awarded against you. The benefits of this can be significant, as while a legal case may not seem to be likely, if it does ever happen it can be a long, stressful, and expensive process.
Interim manager professional indemnity cover would cover the cost of hiring legal help to defend your case, up to an agreed limit. Besides mistakes its also covers a range of other legal eventualities such as allegations of defamation, claims you have breached someone’s confidence or copyright, and even the dishonesty of any employees belonging to an interim management company.
Payout limits on interim manager professional indemnity cover are normally flexible and can be set by the policyholder – so you can get protection up to a limit which is appropriate to your business and which is cost effective while being unlikely to fall short in the event you face legal action.
Many businesses feel just keeping going can be an expense at times. Increasing overheads, fuel costs, and other variables can sometimes eat into profits. But there is another danger which some companies may not even have considered – legal action can be highly damaging, particularly if a company has made an avoidable mistake which has lost a client money. Interim managers, hired to make recommendations as experts, could face the chance of a legal claim if a firm ever feels they have lost out because of their advice. This then leads to potentially high legal bills and even a compensation order. Interim manager professional indemnity cover is therefore something to consider if you offer your advice as a professional.
Indemnity insurance will pay out towards legal costs in the event you make a mistake, omission, or act of negligence in the normal conduct of your business as an interim manager. Although slip-ups may not be common, and even minor when they do happen, some mistakes can be costly. In a more legally-aware society, outside consultants are potentially more vulnerable to getting the blame and facing legal action.
To give an example, a firm might hire an interim manager to run an underperforming sales department. They may be charged with the task of making the department more profitable for the company during their temporary stint with the firm. If the firm feels this assignment has been a failure, and worse still that the sales team are actually doing worse than before, some may be minded to take legal action.
Interim manager professional indemnity cover would pay out against such an eventuality, subject to a successful claim, and would pay all the legal bills associated with defending the case. It would even pay out the compensation, should it be awarded to a complainant. Of course policy limits will apply, but provided you stay within them you have every reason to expect your legal expenses will be paid for by your insurance.
Interim manager professional indemnity also normally guards against other things including the loss or damage of a client’s important data or documents. It will also often payouts should you be accused of breach of confidence or copyright and defamation.
Ending up with a massive legal bill after a long and expensive defence of a compensation claim is the nightmare of many businesses. It can bring some smaller firms to their knees, so many choose to take out forms of insurance which can help protect them against this risk. Working as an interim manager often involves taking on a large amount of corporate responsibility, meaning there is a chance you may face a court case if something goes wrong. Interim manager professional indemnity cover will pay your legal costs if you ever face a claim after a mistake.
This insurance will normally also apply if you make an omission during your regular work, or if you commit an act of negligence. Some companies will not hesitate to take legal action if they feel you have done a job far below what they are expecting. Even worse, you may give them advice which ends in them losing money.
For example, a company might hire an interim manager to help employees improve their efficiency. If the advice proves wrong and actually ends up making them less efficient, the firm may feel they have lost out and could sue you for the money they have lost.
Interim manager professional indemnity cover would pay your legal costs, and even any compensation which would be awarded to the claimant if they were successful. Subject to agreed limits, a policy will pay for your defence team all the way through a case.
Different levels of cover are available, from a few thousand pounds up to millions of pounds for larger businesses. The key thing to consider here is that if you take out a cover level which is insufficient, you would end up picking up any difference after the policy hits its limit. This could mean you successfully defend a case but still end up with a bill, meaning selecting what is right for you is very important.
Interim manager professional Indemnity cover will normally also protect you against claims of unintentional breach of copyright or confidence, and may include public liability insurance. You will also be guarded against any cases which relate to unintentional defamation. Loss of a client’s documents or data will also normally be covered, meaning almost any legal eventuality you are likely to come across does not need to mean you will also face a financial crisis.
As the financial climate darkens, some companies may feel they need outside help in order to make it comfortably through the bad times. Others may already be in trouble and be looking for an extra pair of hands to get their employees back on track. An interim manager can therefore expect to be busy in times of financial uncertainty. Some people may be tempted to go into the business because of their past expertise, but it is important to be aware of some of the legal risks, and some people take out interim manager professional indemnity cover as a precaution.
This is a type of insurance which applies if someone makes a mistake, omission, or commits an act of negligence. Many companies will not hesitate to instigate legal proceedings if an interim manager they have hired gives bad advice, or makes a recommendation which ends in them losing money.
A firm might hire an interim manager to train a group of employees in how to drum up new business. If after the manager leaves, their advice proved unpopular and unsuccessful with workers, the company could lose money and be minded to sue for what is known as a financial injury.
If such a circumstance arose, a professional with interim manager professional insurance would be able to get their insurer to pay for the legal costs of defending the claim. Subject to certain limits, the cover company will essentially pick up the tab for the legal help you need, and will even pay towards compensation which may be awarded.
Different levels of cover are typically available, and here it is important to choose what is right for you. Say, for example that an interim manager has protection for £100,000 of legal bills, but has to fight a case which costs £120,000 to defend, they must pick up the remaining £20,000. This is known as being under-insured.
Interim manager professional indemnity cover could save a business in the right circumstances, particularly if they have to fight a long and complicated case. Policies typically include some handy extras like protection against defamation, breach of confidence or copyright, and the loss of a client’s documents. This is why many people turn to this sector of the insurance industry to ensure they need not overly worry about legal bills if they are ever faced with a serious allegation.