Why you should consider consultant insurance

4 minute read  

If you consult for a living, your clients rely on you for advice and expertise. Whether you work independently or lead a consulting team, your job comes with a lot of upsides, such as the ability to set your own hours and work on diverse projects. But along with those upsides comes a number of risks.

No matter which kind of advice you provide — whether you’re an IT consultant, career consultant, management consultant, or another type of consultant — you’re selling your expertise. So, if a client fails to see the results they expect, you could find yourself embroiled in a costly lawsuit for alleged errors or omissions.

As a consultant, you’re at a higher risk of professional liability due to errors or omissions, or negligence. But you also have to deal with the ‘general’ liabilities that can come with running a business such as clients or other third-party individuals slipping, tripping, and falling, and hurting themselves on your business premises. Any of these issues could impact your finances for years to come — and potentially damage your reputation.

Why do consultants need insurance?

You run your own business and consult on a topic you love. But, regardless of your area of expertise, your job comes with risks.

Errors and omissions

If you make an error or omission (such as forgetting to file paperwork) that causes a financial loss to your client, then you could be sued for damages. And, as an independent consultant, you don’t have the weight of a major corporation and legal team to back you up. Even if you’re found to be not at fault, you’ll still have to pay hefty legal fees to defend yourself in court.

Vehicle accidents

As a consultant, you might spend a lot of time in your car, meeting with various clients. An accident that damages your vehicle could impact your ability to visit clients and do your job — and if you’re using a personal vehicle for business purposes, you likely won’t be covered for losses under a personal auto policy.  Any vehicle being used for business purposes needs to be covered on a commercial auto policy.

Cyber attacks

As a consultant, you’ll also likely have customer data on file, including sensitive or confidential information, so you’re at risk of cyber breaches and ransomware attacks. As a consultant, you’re particularly vulnerable, thanks to the digital nature of some or most of your work.

For example, if you’re a career consultant, you might have personal details about your clients on file, such as social insurance numbers, background checks, and benefits information. If you’re an engineering consultant, you might have confidential blueprints, and if you’re an IT consultant, you might have access to clients’ admin passwords.

Almost all consultants will have names, addresses, and credit card numbers on file. If your network was hacked and client data was leaked, published on the dark web, or held for ransom, would your business — and your reputation — be able to recover?

Liability and property damage

You also face many of the same risks that other business owners do. If you work out of a commercial office or even a home office, you could be held liable if someone injures themselves on your business premises. You also need to protect your office from fires, floods, and other natural disasters, as well as theft and vandalism.

Who needs consultant insurance?

Consulting businesses face many risks and whether you run a small consulting firm by yourself or as part of a team, your business can be impacted.  Basically, if you make a living by charging clients for your advice and expertise, then you should consider consultant insurance.

Depending on your profession (and your province), certain types of coverage may be legally required. Even where it isn’t required, some clients may ask to see a certificate of insurance before signing on the dotted line. If you don’t have adequate coverage, you could lose out to a competitor that does.

Here are just some of the consulting businesses that should consider coverage:

IT consultants
Business consultants
Management consultants
Project managers
Career consultants
Marketing consultants

What types of insurance do consultants need?

Consultant insurance is designed to protect your business against the unique risks you face, including errors and omissions, cyber breaches, and general liability claims. A policy can be tailored to meet the needs of your specific profession — and it doesn’t have to be complicated.

All business owners — including consultants — should consider commercial general liability (CGL) coverage, which is designed to protect your business when you’re found to be legally liable for bodily injury or property damage to a third party customer or client. If you rent, lease, or own a commercial space, commercial property insurance helps provide protection from losses and/or damages to the property your business owns, such as your building and its contents.

If you consult on anything ranging from staffing to projects to technology, then errors and omissions (E&O) insurance can help cover the cost of legal fees related to alleged errors, omissions, or breach of contract. So, if you miss a deadline on a project that causes your client to suffer a financial loss, and your client decides to sue, E&O insurance could help you pay for court costs and settlements.

As a consultant, you’re privy to clients’ personal information, so cyber insurance can help with costs related to data breaches and extortion expenses. So, if you’re hacked and clients’ personally identifiable information is stolen or held for ransom, this coverage can help with remedial actions, legal claims, network repairs, and public relations services.

And, if you use your personal car to meet with clients, your business should have a commercial auto insurance policy. It can help protect you, employed drivers, and passengers if an accident occurs.

Protect your business with consultant insurance today

The right coverage for your consulting business can help you get back on your feet if you’re experiencing a loss. At TruShield, we’ll work with you to build a policy that suits your needs and addresses your risks. Find out more by visiting our business insurance page today!

This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information.