If you run a business, then you may wish to consider management consultants insurance. This insurance is aimed at helping protect you against the financial ramifications of claims made against your business, you or an employee.
The insurance offers professional indemnity cover. Employers’ liability insurance and public liability insurance may form part of your package or, depending on the provider, may be bought as an add-on.
The financial watchdog the Financial Services Authority defines professional indemnity insurance as “a liability insurance that covers businesses in the event that a third party claims to have suffered a loss as a result of professional negligence”. In a nutshell, this means that the professional indemnity insurance policy can step in and cover at least some of any financial losses incurred by a company, up to a pre-defined limit.
There are different types of professional indemnity insurance and, often, different levels of cover too, which can help protect you and your business against the financial fallout of a claim. Management consultants insurance is one such type.
Why you may wish to consider it
If you were faced with a business claim against you or your company, insurance for management consultants could step in and provide a number of benefits which may prove invaluable at a worrying time. This may include financial assistance with legal costs and claims for damages.
When purchasing management consultants insurance, it may make sense to visit the website of a specialist provider of professional indemnity insurance, so you can get specific cover for your needs. Some may offer almost bespoke policy options, to enable you to get the most suitable protection.
The small print
Terms and conditions of professional indemnity insurances will undoubtedly differ among the various providers, so if you are shopping around for the cover, do compare professional indemnity policies on a like-for-like basis.
Points to check before you sign on the dotted line include the sum insured; any exclusions; your obligations as part of that cover; and excesses you may be liable for in the event of a claim.
Remember, no matter how well run a business is, unexpected events can happen that may result in a claim being made against you. Management consultants insurance can step in and may help provide financial assistance and reassurance at a time when you need it most.
If you own your own management consultants business, protecting your livelihood may be at the top of your list. Sadly, in today’s particularly litigious society, any professional is may run the risk of being sued. However, there is insurance that can help provide protection against this event – management consultants insurance.
If you have never considered insurance or have just started out in business it may make a great deal of sense to look into taking out management consultants insurance. In fact it may even be compulsory within some professions.
What are the risks of not having insurance?
If you have no indemnity insurance to rely on, your company may be exposed to claims made against it. If a customer decided to take you to court, you typically have to find the court costs and fees out of your own pocket. These may add up to several thousands of pounds when you add in compensation. With a professional indemnity insurance (PII) policy in place, this generally helps towards easing the costs.
What protection might a policy provide?
Management consultants insurance may typically provide protection against the following:
Professional neglect – If you are seen to have neglected your duties in business you may be looking at court action against you;
Breach of confidentiality – If you have signed a non-disclosure form when working with a company or individual, and you breach their confidence you may become a prime target for a court case. Even if you have not signed anything, you still have be very careful when discussing business with others;
Product liability – If you rent out or sell products as part of your business you are at risk if those products injure or even cause death, this part of an insurance policy provides protection for that specific reason;
Libel and slander – You may say something about a company or individual or quote someone and get it wrong without realizing it. In this case you might be taken to court for slandering them and this is where libel and slander insurance protects you.
Checking the benefits and small print
Before you rush into taking out management consultants insurance take time out to check the benefits of any policy and find out what limitations or exclusions may apply. For example, some providers might include public liability insurance as standard or you may need to add this on to the PII cover.
As with any form of insurance, you may need management consultants insurance because it is an unfortunate fact of life that things can, and do, go wrong.
Whether you work alone or with a consultancy partnership, you may never be 100% certain that the consultancy services you provide for your clients are always going to go exactly according to plan.
Something unexpected may crop up that can be attributable to you through something that you did or failed to do. There may be consequences that result in financial loss or damage to the client
It may be rare today to find a client who reacts to such financial loss with a fatalistic – ah well that’s life – shrug of the shoulders.
These days, clients may well try to minimise any losses by suing the people or person they think is responsible.
If this turns out to be you or your company, then you may find yourself in court defending yourself against a claim for damages.
This could be as a result of:
- negligence on your part, something you did wrong or didn’t do at all;
- unintentional breech or copyright or misuse of confidential information;
- libel or slander;
- legal liability for the loss, erasure or destruction of documents or data;
- a dishonest act by you or one of your employees.
Of course, if you have employees then you may also benefit from the additional cover provided by employers’ liability insurance in the event that your employees sue you on an employment related issue.
If a case is found against you, then the protection of management consultants insurance may cover damages awarded against you as well as legal fees and expenses.
For some professions, PII cover is a mandatory requirement.
While this may not be the case for management consultancy, whether you are a self- employed or operate as part of a small practice perhaps with your own employees, having the protection that professional liability insurance cover can provide may typically be a sensible idea.
Life can be stressful enough without having to worry about the financial consequences of being sued. Management consultants insurance may be able to offer you peace of mind, thereby allowing you to concentrate on what’s important.
One of your responsibilities as a management consultant is to advise your clients on steps that may allow their business to survive and then, hopefully, to prosper. Yet have you applied your analytical skills to your own business and considered the risks of operating without adequate management consultants insurance?
Knowing the risks
You may be fairly confident that you understand the risks you face. Many business people are well aware of the dangers of being sued by a member of the public following an accident on their premises and as a result of this awareness, take out public liability insurance o protect themselves financially if similar happens again.
That’s fair enough but it may be only part of the story.
Did you know that you could also be sued for defamation of character or libel / slander? If you have the misfortune to accidentally lose a client’s document or data you could also face claims for damages – and that may also apply if an accidental breach of confidence arises as a result.
Sadly, that’s not the end of it.
You may also be exposed to claims coming from an accidental breach of confidentiality or your unintentional infringement of intellectual property risks.
The list could continue.
You may hope that your relationship with your clients would mean that no such thing could happen in a problem situation – but we live in a troublesome and litigious world and you may be wrong.
The cost of being wrong
If you do not have management consultants insurance to provide a degree of financial protection against such circumstances, you could be left facing all the consequential costs and awards yourself.
If you do not have help from insurance, the costs may be quite literally ruinous.
Management consultants insurance
This form of protection typically forms part of what is commonly called PII, PI insurance or professional indemnity insurance. It may help protect your financial interests if you are on the receiving end of such claims – and it also typically includes public liability cover as standard.
As with all insurance, the exact specifics of cover and individual terms and conditions will vary depending upon the provider and policy. It’s worth noting that this type of insurance typically excludes circumstances where you were intentionally culpable – such as your deliberate breaching of client confidentiality.
Winning isn’t everything
It may also be advisable to remember that even if you are sued and win, you can’t presume that costs will be awarded against the other party. You could still end up facing painful legal bills – unless you have PII to pick them up for you.
Management consultants insurance can’t stop these legal actions coming about but it may give you the reassurance of knowing that you have a safety net in place.
Many high level consultants may already have protection in place for their premises or their equipment. They may also have a fair amount of training and experience behind them, but still be without insurance which covers the legal risks which may threaten their business. Management consultants insurance is available at levels tailored to the individual needs of a freelance or company as a whole, and may provide a valuable lifeline in the event the policyholder is sued.
There are virtually no restrictions on who may launch a legal action through the civil courts in the United Kingdom. Therefore a client of yours is more than entitled to launch their own case if they feel you have done a poor job.
For example, they may decided to sue you if you make a costly error in your advice, or in training you give to their employees. if you issue a training programme, or make recommendations which later turn out to have lost a company money rather than helped it to increase profit, they may take legal advice and decide to sue.
This may sound rare and it is by no means guaranteed to happen to every management consultant, but if it does happen it may be very damaging to a firm which has limited cash reserves and no indemnity protection in place.
Defending a case normally involves hiring legal help, and if you lose the case compensation may be awarded against you in favour of the claimant. These costs may run into hundreds of thousands or even millions of pounds, and management consultants insurance with indemnity protection is designed to pick up the bill for you.
In exchange for a regular premium the insurance company may cover your legal costs and compensation bill up to an agreed limit in the event you are sued following a mistake, error or act of negligence.
There may be an excess involved, and the premium cost depends typically on the level of protection you require, plus other factors, but in the event of a lengthy legal case, the management consultants insurance cover may save some businesses from going under.
To properly insure a business you may need to look carefully at its risks and assets. You may want to carefully think about the kind of clients you deal with and turnover. Managerial experts, as professional advisers, are as at risk as many other companies, and may want to consider management consultants insurance as a straightforward way of protecting their business.
A business insurance policy may typically include professional indemnity insurance. This is often referred to in the sector as PII. Some people who have never dealt with the sector may never have heard of this phrase before, but to some people it is a staple part of their business defence system.
It is designed to protect against legal threats, which may happen if a client is unhappy and feels you have done a bad job. Worse still mistakes may happen and may lead to clients losing money, to which end they may take legal action, i.e. sue, in order to get compensation.
Management consultants insurance with an indemnity element may pay your legal costs and even compensation fees if you face such an action.
In exchange for a premium the insurance company may cover not just the costs of hiring a defence team, but also the costs of anything which the court awards to the claimant if they are successful. Furthermore, the claim against you need not be invalid for you to get cover, typically a policy pays out whether or not what the other side is saying is true.
A policy often protects against mistakes, acts of negligence, and allegations that you have defamed someone. It even protects against claims you have breached confidence or copyright, or that you or one of your employees has defrauded a client, acting dishonestly in their business.
Protection like this may be crucial in some circumstances because a court case may cost hundreds of thousands of pounds to defend. Unless someone fancies representing themselves, they typically have to hire legal protection which may easily run up massive bills. Then on top of this if the case is lost you may have to pay compensation and even cover the costs of the other side’s defence.
This is why management consultants insurance may prove a lifeline in the face of an unpleasant legal action, which, while by no means certain, is a common eventuality in many business sectors, including consultancy.
When setting up a business and running quite close to the wire as far as finances are concerned, it can be tempting to avoid extra costs such as professional indemnity insurance. However, even well-trained and well-prepared management consultants can face legal action, which can typically be costly and stressful to defend. Management consultants insurance need not be overly costly and can provide a crucial safety net if a professional ever does face legal action.
Without cover a management consultant runs the risk of facing massive legal bills should they face a formal action. This may seem unlikely but a simple mistake in either a consultant’s direct work or in the advice they pass on to a client can be costly. Depending on the error, a client can launch a legal action which will cost thousands of pounds to defend with professional legal help.
Worse still, if the case is lost a consultant can also be faced with a vast compensation bill. Management consultants insurance which includes professional indemnity cover can pick up the cost of legal defence and even the cost of any compensation which is awarded.
In essence it will typically protect the policyholder’s financial circumstances, potentially saving them a bill of hundreds of thousands of pounds or even more in some circumstances. Although it is by no means certain a consultant will face a legal action at some point in their career, being sued is a real and genuine threat.
In exchange for a premium indemnity cover typically guarantees your legal bills will be paid up to a set policy limit in the event you face a claim you have made a mistake, committed an act of negligence or simply omitted something by accident in your work.
Crucially, a management consultants insurance payout is not conditional on the claim against you being false. Even if you have made a mistake, provided it is genuine and not malicious, the insurance will still pay out. Also covered on a typical policy are claims you have breached confidence or copyright, or even allegations you have acted dishonestly and defrauded or stolen from a client.
As a management consultant you may be required to undertake a variety of tasks for a client, from delivering a single day of advice and seminars, to a contract lasting for months and requiring you to help realign the entire direction of a department. No matter how big or small an assignment the client is, it will carry with it a certain amount of responsibility. The management consultant, as a professional in their field, is expected to deliver results and unsurprisingly a client will typically not be best pleased if they feel your advice is not worthwhile. Worse still, they may decide what you have attempted was a mistake or actually harmed their business, which can lead to legal action. Management consultants insurance with an element of professional indemnity can help guard against this eventuality.
Of course, the higher the risks and the higher the responsibility, arguably the higher the chance of facing legal action if something goes wrong. While being sued is hardly a common experience, it does happen and can be time consuming and expensive.
Even if you feel a claim against you is invalid, you will still have to defend it properly. Some clients may wrongly accuse you of making an error, some may be of the opinion that something has not worked as well as it should have done. Whatever the reasons, you will need to hire legal help if you face an official legal complaint.
Management consultants insurance with indemnity cover would pick up the cost of your legal defence, potentially saving you from q bill running into thousands of pounds or more. The money you would get to cover your legal help is not a loan, simply an insurance payout, and most policies will even cover the cost of compensation if it is awarded against you.
In exchange you simply provide your insurer with the premium as you would do with any other kind of policy, and this kind of insurance protects against mistakes, acts of negligence, or claims you have breached someone’s confidence or copyright. An ordinary management consultants insurance policy will often also protect you against unintentional defamation claims, and the accusation you have lost or damaged data or important documents belonging to a client.
Whatever motivates someone to be a management consultant, they are likely to be good at planning ahead and relish challenges. But sometimes the unpredictable can happen and a consultant can find they have made an error or are accused of a mistake, which means a client is not happy. Because they live in a high pressure world, management consultants may often have a lot at stake in relation to their clients’ businesses. This is why some people choose a management consultants insurance policy to guard against some of the things which simply can’t be planned for.
Management consultants insurance may include a form of indemnity protection, which is an insurance element which is designed to help you out if you are faced with the prospect of being sued. This typically occurs if a consultant has made a mistake or error which has cost a client money.
But there are other scenarios which consultants insurance guards against. For example, if a consultant is accused of unintentional defamation, an act of negligence, or losing or damaging a client’s important data or documents. You can also expect protection if you’re accused of breaching someone’s copyright or confidence, or if your consultancy has employees and one of them is accused of acting dishonestly and perhaps defrauding a client.
If a complainant does succeed and compensation is awarded against you, your insurance policy will pay out for this too, provided it is within the policy limit. This limit needs to be decided by you when you take out your insurance, and you may want to look at the size of your business and the size of your clients. Larger companies may want legal protection for thousands of pounds worth of bills, while others may need a much smaller level.
Legal issues are often also quite unpredictable, and it may take months for a claim to arrive. To this end management consultants insurance can be configured to provide protection if you are changing jobs or insurer, or if you’re winding down a business or retiring. Retroactive cover even protects against claims which arrive in future but which backdate to before you even bought the insurance.
As the economic outlook becomes gloomy or unpredictable, many companies can look to plan for the future and make sure their staff and structure is sound and able to deal with any challenges. Some firms even turn to outside help to make sure they have their house in the right order, and management consultants can play a vital role in helping struggling businesses cope or thriving ones make the best of what they have. But professionals need to ensure they have the right cover in place, as protection often needs to go beyond mere property. Management consultants insurance can be bought which even covers against legal claims.
Consultants insurance which includes a professional indemnity element effectively provides a safety net should you ever be accused of making an error. In simple terms it will pay your legal defence fees if you are ever sued by a client who thinks you have made a mistake, omission, or acted negligently. Normally they will seek legal action in the event that they feel they have lost money because of an error. This is never a pleasant experience and you can sometimes even end up paying compensation. Management consultants insurance with an indemnity element would even pay this compensation, meaning you potentially need to hardly pay a penny towards the defence of a legal action.
You can agree excesses in many cases, meaning you pay initial fees and therefore perhaps a smaller premium. So you might want an excess of a few thousand pounds depending on your circumstances, which could mean a slightly smaller cost for the insurance. As with other forms of insurance, you need to agree a limit for your policy as insurance companies do not pay out indefinitely after you have claimed successfully due to an action being brought against you.
You can find the right level of management consultants insurance by thinking about the kind of clients you deal with, the contracts you often sign with them and the work which is often undertaken. Larger companies may want protection for a considerable amount of legal fees and compensation, while smaller firms will not need as much. Avoid being under insured but avoid paying too much for what you need too.