You may have clients who require you to be insured if you work in management consulting. You might be a freelancer or a small business with only a few employees. You might wonder if all this coverage will ever be used.
If the client insists on it, you’ll need professional liability insurance to get the job. The good news? Getting the necessary insurance coverage is both affordable and profitable for your company.
Most companies require their management consultants carry at least one of these three types of coverage.
General liability insurance
General liability insurance covers companies in the event that an injury occurs on-site or damage is done to company property. This type of insurance is often needed by management consultants. It’s not likely that someone giving a presentation, or going to a meeting, will cause any damage or injury to the client’s property. Management consultants are at risk of being sued.
Client companies may require their vendors to show proof of general liability insurance. This includes delivery personnel, electricians, and management consultants. Sometimes, investors from clients give the order to the vendors in order to lower the company’s financial loss from lawsuits. Management consultants face the same risk as other office visitors when there are accidents.
General liability insurance can protect your business in the event that there is an injury or accident at the office. General liability insurance covers you for any legal or medical costs that may arise if a client comes to your office in the rain on a wet day. This could save your client relationship. Insurance for management consultants is a good investment in your business.
Professional liability insurance
Professional liability insurance, also known as errors and omissions or E&O insurance, is essentially malpractice insurance for management consultants. This insurance covers you for the errors and omissions you make or those of your employees while on the job. There’s a simple reason that clients require E&O insurance for management consultants: They know that people make mistakes.
The greatest risk to your client when you are hired as a consultant in management is liability. Your mistakes could lead to a lawsuit or financial losses. Let’s say, for instance, that you have revamped a company’s budgeting process but made a serious mistake in the new system. This can cause major problems when the budget and actual expenses are reconciled later in the fiscal year. Your client could claim that any financial loss resulting from the restructuring was caused by an oversight or error of a management consultant. They will demand compensation.
Having professional liability or E&O insurance for management consultants is a good idea. You could be held responsible for high legal costs if your client sues you. A simple miscommunication is usually all that’s required to start a lawsuit. If a client claims you are negligent or communication is broken down, legal expenses can increase. E&O insurance gives you peace of mind that should things go wrong, you’re covered.
Workers’ compensation insurance
While some states require workers’ comp insurance, others don’t. Your management firm will be required to provide workers’ compensation insurance for clients whose residence is in a state that requires such insurance, even if it is not required by your home state.
Your client’s workers’ compensation policy must be in place if you are hurt on the job. Your client’s insurer may also require you to provide proof of insurance for contractors in certain states. Both of these scenarios will increase your client’s premiums. In such cases, management consultants may also need workers’ comp insurance.
Workers’ compensation covers medical expenses, disability, and compensation for injuries sustained on the job. If you are a sole practitioner and have your own health insurance, workers compensation insurance may not be required. However, it may be important for your client if they require it.
Protecting your employees with workers’ compensation insurance is a smart business move if you run a management consulting firm. Every little thing can cause injury, from carpal tunnel syndrome to a slip on the bathroom floor. Workers’ compensation insurance covers your employees and prevents you from having to pay for ongoing care.