Professional indemnity insurance is essential for any company that provides services or advice for a fee – including contractors. In fact, customers often need proof of insurance before doing business with you or your company.
What is insured in professional liability insurance?
Professional Liability Insurance covers defense costs and damages if your company is sued for negligence, negligence, error or misinformation, whether or not those claims are well founded.
Without them, your company is on the hook for all legal costs and a major litigation could bankrupt you or your company. Consultants acting as Sole proprietorship could be held personally liable for financial damage if they do not have professional indemnity insurance.
This is how professional liability insurance protects advisors
Professional indemnity insurance can provide valuable protection for many different types of advisors, including:
Public Relations Consultant.
Market research analysts.
Are you wondering how professional liability insurance could apply to your consulting company? Here are some scenarios where coverage (aka Failure and omission insurance) would intervene.
Consultants are hired based on their expertise in a specific area. However, if a customer feels that your referral has harmed their business and cost them money, they can try to hold you accountable.
This can have additional effects on IT and software consultants, as poor advice can reveal company or customer data. Some insurance providers offer technology failure and cease and desist insurance that bundles professional liability and cyber liability insurance.
Compliance and reporting errors
Personnel and management consultants can be commissioned to collect and evaluate data for reports or projects. Entering wrong numbers or missing an important detail can cost your client money and trigger a lawsuit against your consulting firm. Professional indemnity insurance would cover legal and defense costs, among other things.
A client can sue if work is not carried out in the agreed time, even if you are not directly at fault. If you have professional indemnity insurance, you are not personally liable for any resulting damage.
Professional liability insurance costs for consultants
A typical policy has a limit of $ 1 million (per event and total), but coverage limits range from $ 250,000 to $ 2 million or more. How much insurance coverage you need depends on the level of risk to your company.