There is, perhaps, a slight danger that management consultants’ professional indemnity insurance is seen as a luxury and nice-but-not-essential accessory to your professional portfolio.
That logic and train of thought may be fine – right up until you find yourself being sued under any one of several categories including things relating to losses of data or documents, libel and slander, public liability or accidental breach of confidentiality etc.
The problem is that, as a management consultant, you will typically operate in close contact with your client. Through your fees, you will be helping position them for success and taking your rewards accordingly.
While things are going well, everybody may be happy with that situation.
However, if things go wrong, and that can happen very quickly, your clients may expect you to take responsibility for the consequences – and they may demand more than just a sincere apology.
If you don’t have management consultants’ professional indemnity insurance, you may find yourself in some cases facing insurmountable costs that could, potentially, bring your business down.
Keeping cover effective
It’s also worth keeping in mind that your potential liabilities don’t cease the moment your contract with the client does.
Client can, and sometimes do, take action a considerable period of time after a contractual relationship has been formally terminated.
If you have allowed your insurance to lapse, you may find yourself needing to deal personally with any financial implications arising.
A selling aid
Some potential clients may be positively influenced by your ability to show that you have this sort of insurance cover.
Others may, in fact, insist that such cover is in place as a mandatory component of any request for information or a proposal. Being seen to be rushing to put this into place at the last second may not create quite the professional impression you were hoping for – so thinking ahead may be advisable.
Like any insurance, management consultants’ professional indemnity insurance costs money. Yet those costs may typically be seen as being modest in view of the protection and peace of mind provided. Finding out more may be a useful investment of a few minutes of your time.
The recommendations made by management consultants may often involve the future wellbeing and growth of their client’s company. Management consultants’ professional indemnity insurance aims to ensure that any damages sought by the client as redress, should those recommendations not work out, could be covered.
Professional Indemnity Insurance or PII typically provides financial protection for a wide variety of professions and professionals against the financial consequences of being sued by their clients.
It provides cover for a wide number of eventualities that may arise as a result of the services provided. These typically include:
- accidental breach of confidentiality;
- loss of documents or data;
- libel or slander;
- dishonesty by the consultant or their employees;
- unintentional infringement of intellectual property rights.
Any of these may cause financial or reputation loss to the business of the client, whose response could be litigation for restitution.
Without management consultants’ professional indemnity insurance cover, you may find yourself personally liable for any such awards together with legal costs and fees.
PII cover may typically provide this kind of protection;
- for you if you work on your own;
- for your business partnership;
- for any employees that you may have – though this would not extend to employers’ liability cover which you may need in addition .
For many professions involving the provision of consultancy services, PII may not actually be mandatory.
However, clients may request that consultants provide their own cover. Even if they don’t though, in a competitive selling marketplace, potential clients and buyers may value a proposition that includes a comment about the existence of PII.
They may regard it as a sign of your personal responsibility and experience.
As a consultant, you may always endeavour to provide clients with exemplary work, to meet your commitments and achieve a successful outcome on each assignment.
Unfortunately in a high stress occupation, mistakes can and do happen though.
Making sure that you have the resources to cope with the financial consequences of any such mistakes may be that bit easier if you have the protection of management consultants’ professional indemnity insurance behind you.