More and more organisations are relying heavily on outside help, with the public and private sector both readily hiring outside consultants, and spending millions in the process. Two councils in North Wales recently spent more than £5 million alone on management specialists, according to the Daily Post newspaper (16.7.2008) But to work in the full range of sectors, most training consultants will require a form of training consultant professional indemnity insurance.
A policy is not just necessary for a firm to even be considered for a contract with many local authorities, it will also provide a self-employed consultant or specialist company with valuable general protection. A professional indemnity insurance policy is designed to protect against legal claims connected with a business injury. This means any cash-related loss suffered by a client due to a policyholder’s mistake or negligence. Most types of indemnity cover will also protect a consultant if they commit an unintentional infringement of intellectual property rights, lose or damage any valuable documents or commit any libel slander or defamation which is unintentional. Policies will also protect a consultant should they be accused of unintentional breach of confidence.
Cover is important for a professional training consultant as they are typically considered by clients and the people they train as experts in their field. Their advice is likely to be taken seriously and their recommendations implemented. Should they make a mistake in their advice which leads to commercial harm, a legal claim may be made. Defending a claim, even successfully, is expensive, and training consultant professional indemnity insurance will cover legal costs and the costs of any compensation awarded to the claimant, subject to certain limits.
As an outside consultant, a training professional may be required to have insurance in place as part of their contract. However, a policy should not simply last for the duration of the training in question. Many legal claims are delayed and do not materialise until some time after the related event. So if a policy expires at the end of the training, and a legal claim arises months later, the consultant will not be covered. Many professionals will take out cover which lasts for a period after they retire or stop trading – this will protect them in the event a legal claim arises relating to something which happened while they were still working. This is known as a ‘run off’ or ‘overrun’ period.
The arrival of a court action, while by no means certain for every advisory business, can be extremely harmful financially, even to bigger businesses. Training consultant professional indemnity insurance will help protect against this harm and at the very least allow an individual or company to trade in peace of mind.