Thinking ahead regarding Management Consultant’s insurance

November 18, 2010 · Filed Under Management Consultant Insurance 

One of the required characteristics of a Management Consultant is the ability to ‘look ahead’. Using that skill to think about Management Consultant’s insurance might be worthwhile.


A management consultant (or consultancy) will typically put a lot of effort into building and maintaining a relationship with their client.

However successful that is, commercial relationships can sour in an instant and things may go from bad to worse.

In some circumstances, your client (or ex-client) may decide that your performance has led them to suffer material loss and they may expect to hold you accountable for that legally.

If you are sued under the auspices of professional liability, you may find yourself on the receiving end of claims for damages due to:

  • negligence;
  • misstatement or misrepresentation;
  • unintentional infringement of intellectual property rights;
  • the accidental misuse of confidential information;
  • a loss of documents;
  • etc.

If the case goes against you, then you may find yourself on the receiving end of very large awards and legal fees.

Typically the professional indemnity insurance component of management consultant’s insurance may help protect you from such costs.

The public and your employees

If you employ staff, in some cases even if they’re friends or family simply ‘helping out’, the law may demand that you have employers’ liability insurance to protect their interests.

By contrast, there is typically no legal requirement to have public liability cover but it may be wise to do so. If a member of the public (e.g. someone on the client’s site) is accidentally injured as a result of your actions, premises or property, they may sue you.

Once again, consultant’s insurance typically may help you deal with meeting such claims.

Is consultant’s insurance essential?

Excluding, possibly, employer’s liability cover, typically you may be under no obligation to take out such insurance protection.

However, some potential clients may demand to see evidence of your management consultant’s insurance before any contracts are awarded. It may be seen as a sign of professionalism, maturity and to some extent, risk reduction for them. By contrast, being unable to provide evidence that you have such cover may be negatively interpreted. Also, with some professions, having PII cover may be mandatory (for example, if you are an accountant).


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