Management Consultants’ Insurance – The Risks

Just when you thought you had all the angles of your business insurance covered, you discover that there is an additional heading that could prove vitally important if you are running a management consultancy. This extra element of insurance – management consultants’ insurance – may well have been picked up by your specialist insurance intermediary, but either way, it could prove vital to the continued success and viability of your business.

  • Professional liability insurance – this is the generic name of the additional cover you may well need as part of your management consultants’ insurance. Just as the name suggests, it is a form of cover usually taken up by anyone in the business of providing professional services to their clients and, in addition to management consultants, might also be held by such people as accountants, lawyers, engineers or architects;
  • Why? – cover for professional liability – such as management consultants’ insurance – is usually necessary because of the potentially large-scale claims that can arise from clients who successfully argue a significant financial loss brought on as a direct result of the management consultant’s advice or recommendations. These can arise for all manner of reasons, including for example, errors or omissions on the part of the consultant, the loss of or damage to clients’ documents, or even penalties arising from the Data Protection Act;
  • Tailor-made – as with any other kind of insurance, however, if you are in business as a management consultant, you will want to be assured that the cover you have is sufficient for your business needs, without having to pay over the odds for elements of cover that are irrelevant to your particular line of work and that you know you may never need. For this reason, a number of insurers offer professional indemnity packages specifically tailored to the needs of management consultants and those operating as a smaller-scale business. A specialist insurance intermediary is likely to be the best source of information on the most appropriate forms of cover available;
  • Public liability insurance and more – there is a much wider range of insurance cover which the prudent management consultancy will also wish to consider, of course. Chief amongst these is likely to be straight forward public liability insurance. Even if your management consultancy is being run from a home-based office, for instance, you are likely to want the reassurance of suitable cover for the many and varied public liability risks. Although some standard home insurance policies will include public liability cover, it is certainly something which you might want to check carefully.

Management consultants’ insurance is cover which is likely to be essential to your conducting your business smoothly. And, suitable insurance is something which many clients may well require before entertaining your services. Appropriate cover, therefore, might not just be a useful financial safeguard against the defined professional risks, but also help you to secure the business you are after.