Typical extra options for management consultants professional indemnity insurance
Management consultants professional indemnity insurance in its simplest forms pays for the policyholder’s legal costs in the event they are sued for an error committed in their business – but normally it can go much further than that. Depending on the deal it can include various extras and some insurance companies even tie in other forms of cover in with it for an overall package price.
Checking what a deal will actually pay out for is important – normally it is expected to cover legal bills in the event of an accusation of a mistake, omission or act of negligence. This often also includes claims that a consultant has lost or damaged data or documents belonging to a client, or that they have unintentionally defamed someone and therefore face being sued for libel.
Deals frequently protect not only the cost of hiring legal help to defend a case – which in some circumstances can be a massive expense, but also typically cover the cost of compensation should it be awarded against the policyholder who loses a case. The maximum payout limit on a policy is therefore important and is often down to the policyholder’s own judgement. This can be based on the size of the consultancy firm, its clients and the size of the contracts it is asked to undertake – some firms may require higher cover levels, and therefore may pay higher premiums, than others.
Insurers may offer some extras with management consultants professional indemnity insurance including public liability insurance either as an optional extra or as part of the price.
A few other features can be useful too. A common one is what is known as retroactive cover which means the cover will pay out if the policy holder faces a legal challenge in future which relates to something so historical it happened before the insurance was taken out.
For example a management consultant may be hired by a firm in March to provide a series of training sessions to senior staff. The job might be completed and payment processed with the client apparently happy. Then in April the consultant might buy an indemnity insurance deal with retroactive cover and in June get a claim in the post relating to the March assignment which the client says involved advice which actually lost the firm money. Provided the policyholder had no prior notification they were going to face the claim, they may be covered as they would be had the incident itself happened after the policy was purchased.
Management consultants professional indemnity insurance may also offer a run off cover option – this refers to protection which can continue for a period of time even after a consultant has ceased trading, retired or changed jobs. The risk of legal action relating to a past contract does not go away simply because someone has left their position, but remains for a period of time after the event.
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