What is management consultants professional indemnity insurance?

Management consultants professional indemnity insurance is a form of insurance cover designed specifically for business people and professionals. It looks to offer you financial protection should you be sued for any one of a number of specified reasons.

Why would I be sued?

It doesn’t matter how careful and conscientious you are in the practice of your management consultancy, there is always the possibility that something will go wrong for either you or one of your staff.

It doesn’t take much to suddenly find you’ve an irate client on your hands.

If you think that’s bad, it’ll be as nothing compared to the troubles you may face if your client is sufficiently angry to sue you for damages under any one of a number of headings.

In today’s business world people are perhaps more inclined than ever to attribute blame when things go wrong and to seek compensation – that’s how you could end up in court. Even if your client (or probably ex-client by this stage) fails to win their case, you may still find a huge legal bill landing on your desk.

In a nutshell, that’s why management consultants professional indemnity insurance exists – to typically help meet the financial costs and awards associated with such legal actions.

Where am I vulnerable?

Your legal exposures may vary depending upon the exact nature of your business but typically include you being at risk of being sued due to:

  • breaching confidentiality (accidentally);
  • libelling or slandering a third party or client;
  • delivering a solution that caused consequential damages (product liability);
  • accidentally infringing intellectual property rights;
  • losing critical client data or documents;
  • public liability-related accidents.

This is far from a comprehensive list. If you are sued for any of the above reasons or others, then you may be making some very large payments unless you are covered for an insured-risk through a management consultants professional indemnity insurance policy. (Do note that in relation to the alter bullet point, public liability insurance may not always form part of a professional indemnity insurance policy and may have to be bought as standalone cover, so always check the policy wordings).

Would I be covered against everything?

All insurance policies of any type carry details of the insured risks, exclusions and conditions. It is typically highly advisable to read these carefully.

Some policies of this type may exclude cover under some categories of risk should you be proven to have intentionally committed an offence such as the deliberate publication of client confidential information.

Isn’t it expensive?

Little if any insurance is ever free but the cost must be weighed against the risks you run by continuing your business uninsured or under-insured.

Doing without cover may continue to appear to be the right thing to do – right up until you encounter a problem and are sued.

Management consultants professional indemnity insurance may be surprisingly attractively priced if you think about it in the context of the sums that may be awarded against you by a court or tribunal!

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