Guarding against unpredictable risks is what insurance is all about, and this is why many professionals who offer their services on a consultancy basis look at guarding against some pitfalls with professional indemnity policies. This is a kind of cover which can pay for your legal costs in the event you are accused by a client of making a mistake which has cost them money. Management consultant professional indemnity cover is a form of this kind of insurance specifically tailored to those offering management advice either as an individual or as a company.
Previously only associated with certain professions, professional indemnity protection is now popular with a wide variety of businesses offering advice. Because a firm does not employ a consultant as such, they may seek to take legal action to recover costs or get compensation if they feel aggrieved following a real or perceived mistake. Of course, in normal circumstances a company can simply sack an employee to get what they may feel is redress, but costly errors made by consultants can prompt legal action.
Being sued can prompt huge problems to those businesses which do not have some form of protection in place or which do not have considerable resources to spend on legal help. If they lose a case, they can be ordered to pay compensation to the client, and this can run into hundreds of thousands or millions of pounds depending on the circumstances. Legal cases can often drag on for quite some time in some circumstances, months or even years depending on the client and the nature of the case.
This is why management consultant professional indemnity cover can come with a limit in the hundreds of thousands or even millions of pounds. However, not all consultants need a limit in the higher reaches – some smaller firms with a limited turn over and smaller clients can often get a much smaller level of protection.
The premium itself is linked to the policy limit, and also the nature and size of the business. Providers may also ask a management consultant a bit about how they agree and contract assignments and a bit about the qualifications or knowledge of the consultant. This can all affect the cost of the insurance, but policyholders can often also specify an excess as well as the limit, giving them a further element of control over the quote.
Management consultant professional indemnity cover can guard against not just general mistakes but some common and specific scenarios like losing or damaging important data or documents belonging to a client, unintentionally breaching confidence or copyright on an assignment and can even pay out if a legal claim arrives which is so old it dates back to before the insurance was even bought, something known as ‘retroactive cover’.
Anyone who has gathered detailed and expert knowledge can set up as a management consultant, offering their valuable experience to clients who need the advice of an outside source. Some may need you to retrain a section of the workforce, others may need you to even run a department for a period of time, while some will be looking for advice towards developing new business strategies. All of these things are challenging and rewarding, but all of them can carry hidden legal problems. Should you make a mistake, or even be accused of it, you could face legal action. While this is part of the job of being a freelance and part of being a management consultant, it is also unpleasant and potentially a financial disaster. Management consultant professional indemnity policies provide you with an invaluable shield against legal action by paying for your legal defence.
Many people decide that this kind of cover is useful simply just as a safety net. It will kick in if you are formally accused of making an error, omission, or acting negligently the normal course of your work. Should this have caused a client to lose money, they may feel they have suffered what is called a financial injury. This means they will take legal advice about getting compensation in some cases.
Of course you will need a legal defence, and to do this effectively it can help to not have to constantly worry about the legal bills associated with it. Management consultant professional indemnity picks up the tab, even covering the cost of compensation should it be awarded against you.
Of course there are some conditions, and these normally include that what you did was not deliberate or malicious. For example, a policy will normally protect you against claims that you have defamed somebody, with a condition that you did not defame someone knowingly. Other eventualities typically covered include the loss or damage to a client’s data or documents, although again obviously this will obviously need to not have been deliberate.
An indemnity policy like this normally also protects against the claim that you have breached someone’s confidence or copyright, and if you have employees as part of an agency, for example, any claim that they have acted dishonestly will also normally be covered.
Management consultant professional indemnity typically comes with a ceiling on the policy, beyond which the insurance company will not pay out. However, limits can normally be quite high, and you will need to make a decision about what amount would be suitable for your business. Companies dealing with higher level clients with a turnover in the millions, may need protection for millions of pounds, for example, while a lone freelance with a limited client list may not need this.
Businesses often plan ahead and think about how they would cope in a crisis, from a faltering economy to a dramatic sea change in the industry. But many independent consultants also consider the legal risks, and many look to guard against the chances of being sued with an indemnity policy. Management consultant professional indemnity is a form of cover which protects professionals operating in the sector, paying the legal fees if they ever get into hot water.
Indemnity insurance is not only popular with management consultants but with a wide range of different professionals. Traditionally it has been associated with graphic artists and architects, but it is increasingly relevant to a wide range of hired professionals. This is due to a more global and more legally aware society, where clients may be more inclined to take legal action if they feel they have been wronged.
Even claims which are completely invalid will need defending and this may mean hiring legal help. Management consultant professional indemnity cover would pay for your legal bills up to a set limit if you were ever accused of making a mistake, error, or committing an act of negligence. Unintentional defamation and breaches of confidence and copyright are also typically covered.
The beauty of this kind of insurance is that it does not matter what level your case reaches, be it a few simple hearings to straighten out a dispute or an appearance at the high court, your cover will still apply if you are still within the limits. The cap on your policy will need to be decided by you and it’s important to select something which is appropriate to your business. Large consultancy firms employing a number of people and with a long client list might need protection for hundreds of thousands of pounds or more, while a smaller firm may want something much more limited.
Indemnity Insurance also typically pays out towards compensation which may be awarded against you, and the benefits of this are obvious as sometimes financial redress as part of a lawsuit can be quite significant. Few businesses would be able to simply shell out what has been asked of them by a court without it affecting their performance, so indemnity cover can be vital.
Legal claims can often be slow to arrive, which means you can choose retroactive cover with some insurers. This is a feature which protects against claims which arrive in future after you have bought the policy, but which date back so far that they relate to something which happened before you even bought the insurance. Likewise management consultant professional indemnity insurance with a runoff or overrun cover feature protects you for a set period after you have finished trading, retired, or changed insurer.
Consultants big and small provide a valuable service their clients, using specialist knowledge to make recommendations about how they run their business or train their staff. Management consultants can even be asked to make recommendations about how the hierarchy of a company works or how they should run certain sections of it in future. Occasionally they can have the future of a company in part in their hands, and their advice is likely to be taken seriously as they are seen as an expert in their field. While this all makes a business viable, it also means management consultant professional indemnity is a type of cover which anyone operating in the sector might want to consider.
Professional indemnity insurance or PII, is a straightforward type of cover policy which will pay your legal fees in the event you are formally accused of making a mistake in your day to day business or role. It protects consultancy firms and individuals as appropriate, and normally applies if someone is effectively sued because they have been accused of making a mistake, omission, or even committing an act of negligence.
Management consultant professional indemnity pays the legal bills run up defending such an action, as even completely invalid claims will have to be defended if they are lodged formally. Cases can sometimes run on for months or even years depending on their complexity and the nature of the complaint. If your defence fails, the complainant may be awarded compensation, and professional indemnity insurance will even pay this out for you. It also does not matter what level of court your case reaches. Provided you are still within the policy limit, for example, a policy would pay out for your legal defence even if your case ended up being heard in the high court.
It is important to note that an indemnity policy will not pay out indefinitely and there will be a limit to it. You will need to decide this and select what is right for your business. Too small a level and you could end up being under insured and picking up the cost of any legal expenses at the back end of a case. If you decide a ceiling which is too high, you could end up with a premium which is too expensive for a level of protection you do not need. Insurance companies can help you decide and it can help to look at the size of your clients and typical contracts agreed with them.
Management consultant professional indemnity can also protect you against claims that you have breached confidence or copyright or even if one of your employees has acted dishonestly if this applies. Some insurance companies will even throw in public liability insurance as an extra. Therefore it is possible to protect your business against a range of legal eventualities for an effective cost.
Whatever your motivation for being a management consultant, you are likely to enjoy pressure and responsibility. Helping a company achieve its goals can be a rewarding experience, and the freedom and creativity working as a freelance brings can be more enjoyable than any fixed role in one company. But the tasks a management consultant takes on usually mean they have a certain degree of a company’s success in their hands. This means mistakes can be costly, even if they are rare occurrences. Management consultant professional indemnity is a type of cover which will protect you if you ever face an unpleasant legal claim due to something which has happened in the conduct of your business.
Normally, disputes can be sorted amicably. You may even agree a form of compensation without getting solicitors or lawyers involved. Of course, mistakes are not guaranteed and some firms will manage to go years without a dispute arising. But errors can happen, and in the right circumstances can cost a client an awful lot of money. In the worst circumstances they may be minded to sue for compensation, and management consultant professional indemnity will pay for the cost of legal help.
The benefits of this are obvious, as solicitors and lawyers are expensive to hire but are essential if you want to defend your case as effectively as possible. Should you lose the action, you may be ordered to pay compensation by a court, leading to even more expense. By the time a case got this far, the bill may have run into thousands of pounds or more. Indemnity cover pays not just your fees but also any compensation which might be awarded to a successful claimant, subject to the policy limitations.
Few companies, and particularly freelance management consultants, have the resources available to simply carry on paying out for legal help and expenses. That is why an insurance policy can save the company an awful lot of money in the wrong run, even if it involves a modest premium.
This kind of cover normally does not just protect you against mistakes you make. It also covers acts of negligence, omissions, breaches of confidentiality or copyright, and even allegations of defamation. Some policies even throw in public liability insurance, as an optional extra or incorporated into the cost of the policy. Policies can also be tailored to cover claims which arrive in future but which date back to something which happened a while ago – such is the slow nature of the legal process at times.
Just about everyone has mulled over how they would deal with a court case if one ever arose, and management consultant professional indemnity also delivers peace of mind that you will have the financial resources available should you ever be accused of making a costly mistake during your normal working practice.
Although it can be an exhilarating and rewarding job, the role of a management consultant involves an enormous amount of responsibility. Few professionals operating in the sector will be unaware of how much is often placed upon their shoulders. Even straightforward one day training sessions can help make or break businesses, and your knowledge can be relied upon to make an instant and visible difference. This means clients expect an expert level of service, and also want value for money. If someone who has hired you ever feels they have not got this, they may complain and can even seek legal advice. Management consultant professional indemnity is one way of protecting against some of the legal concerns which can threaten some consultants.
Of course, there is no guarantee that a mistake will be made leading to a court case. But few professionals go through their entire careers without making an error of some kind or another. If a mistake happens and costs a client money, they can then possibly seek out a legal action, meaning a case will have to be defended. Some cases can take over a consultant’s life, eating away time and money, and potentially ruining their business.
Management consultant professional indemnity is a form of insurance which someone can claim on if they ever face a legal challenge relating to a mistake, omission, or act of negligence they have committed. It will help pay for the cost of defending a case, and will even award compensation to a successful claimant.
So a policyholder firstly gets peace of mind that they will not immediately have a financial question mark hanging over them if they face a case. Secondly they can save thousands of pounds, hundreds of thousands of pounds or even more because their insurer picks up the legal tab.
Insurance companies do not pay out unlimited amounts of cash towards policyholders. A set limit will be agreed at the start of a policy, which an insurer will not go over when paying legal costs after a successful claim. These levels can range from a few thousand pounds up to hundreds of thousands of pounds and even millions. How much you need depends on the size of your business and the typical type of client you deal with.
Management consultant professional indemnity can also be quite good value, as policies are normally fairly flexible and will include valuable extras. For example, many types of cover include protection if someone faces an accusation they have defamed someone. Other eventualities typically covered include allegations of breach of confidence or copyright, and even the dishonesty of a consultant’s employees. This means almost every legal angle is covered, potentially safeguarding the future of a business in the long run.
Organisations big and small, public and private, increasingly rely on the help of external professionals to improve their efficiency and skills. A management consultant can often be hired to provide training for key workers in a business, or simply to suggest improvements in working practice. Sometimes this training and advice is relied on to improve financial performance. If the opposite happens and a poor recommendation or piece of erroneous advice leads to a firm losing money, a company could be minded to try to recover their loss through a legal action. In some cases the cost of defending a case could pose serious problems for an independent consultant or specialist firm. However, management consultant professional indemnity insurance can protect a firm from such threats.
Management consultant professional indemnity will provide financial support should a consultant face a claim that they made a mistake or acted negligently, and that this led to financial injury for a client. Of course, it is by no means certain that a consultant will face being sued during their career, but it does happen. Legal bills can be heavy and can even be crippling in some cases. Professional indemnity insurance takes this concern away by picking up the bill, subject to certain limits.
Professional indemnity insurance also covers such legal threats as being sued for unintentional libel or slander. Other errors, like losing or damaging important documents belonging to a client, will usually also be covered. Even unintentionally breaching confidence or copyright will typically be covered by an indemnity policy, which may also include public liability insurance.
As with other types of insurance, professional indemnity cover will usually include excesses and limits. So, a policyholder may need to meet the first £500 worth of legal bills before a policy kicks in. They may also have cover up to, say, £100,000 worth of bills and no further, although cover can be provided to different limits for varying premiums.
Time is also a factor when it comes to legal cases. Many policies include retroactive cover, meaning they will even cover a legal claim which arrives after the policy started but which relates to an event which took place before that date. Consultants who retire or cease trading can also get what is known as ‘run off’ cover, which continues for a period after they stop working to provide protection for any claims which are slow in arriving.
Management consultant professional indemnity insurance is therefore an important safety net which can provide vital financial relief if a policyholder makes an honest mistake. All a policyholder need do is decided on the right level of cover which suits their needs. Once in place, the policy provides peace of mind and can even ensure a business keeps going as normal if it must face a legal challenge.