The business benefits of holding management consultant professional indemnity cover
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’.
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