Why would a person need their own insurance policy because of their business? It depends on their line of work, and if they are an outside consultant providing professional advice, like a management consultant, they may run some risks which have not cropped up on their radar yet. As a consultant, a professional carries an amount of responsibility and duty of care to do a good job. If a client feels that the management consultant has failed them and worse still made a mistake, they could take legal action. Management consultant insurance with a professional indemnity element is a way of guarding against this eventuality.
Indemnity cover is really a complicated word for a type of insurance which pays your legal bills in the event you are sued. This might happen because a client has accused you of making a costly error, causing what is often called a financial injury. They may seek compensation, and management consultant insurance with indemnity will cover not just your legal bills but also this too.
Facing legal action will often mean seeking legal advice, and this will rarely be cheap. Indemnity cover as part of a general policy will pay for the cost of hiring legal help, up to a certain limit which is agreed when you take out the policy. Payouts are not loans, but straightforward cash from an insurance company in the same way you can expect money after a successful car insurance claim. It will cover all your legal related costs up to the limit, and right the way through the courts system so it does not matter how far your case gets.
It also does not matter how valid the claim against you is, and some will be completely without foundation, but might still need defending. The more high profile cases you may have heard about in the press can lead to compensation totalling hundreds of thousands or millions of pounds, but this is rare, and a policy limit with this amount on it won’t be needed by a certain number of businesses.
There are some extra elements to indemnity cover, which includes protection should you be accused of breach of confidentiality or copyright, defamation, which must be unintentional, slander, and the damage or loss of a client’s important data or documents.
Management consultant insurance with professional indemnity can also be used to cover you for a period after you decide to wind down a business or retire. This means you are not vulnerable to an action due to your cover ending just as you stop trading. Just because you are no longer working in the same capacity does not mean you will be immune if a legal claim arrives afterwards, relating to something which happened some time ago.