In general, the essential coverages that consultants need are professional liability and general liability. If you have employees, you may need a workers' compensation policy. In addition, if you have a company vehicle, you must obtain a commercial auto policy. By taking out liability insurance, you'll have peace of mind knowing that financial resources are available should your consulting firm face litigation.
Entering wrong numbers or missing an important detail could cost your client money and cause a lawsuit against your consulting firm. The goal of InsuranceBee is to provide a service to companies like yours: independent consultants, independent professionals and consulting firms. You've finally decided that this is the year you'll break new ground and start your own consulting business. The cost of professional liability insurance depends on several factors, including your industry, coverage limits, the size of your consulting firm, and any previous claims.
Liability insurance for consultants has a purpose that goes beyond simply providing protection in the event of a civil lawsuit against your company. Commercial general liability insurance (CGL) is useful to protect your consulting business in the event that a client files a lawsuit alleging that you caused them a service interruption or financial loss. For example, a strategy consultant may need a typical policy against errors and omissions (E&O), while an IT consultant may need coverage against technological errors and omissions (Tech E&O), depending on the scope of their services. The extent of risk and liability in your consulting work depends largely on the type of services provided and the tasks performed.
Consultants who work as sole proprietors could be personally liable for financial damages if they don't have professional liability coverage. For example, marketing consultants may face libel or defamation lawsuits, while accounting consultants may face the possibility of making a mistake when entering data that negatively impacts accounts payable, including employee payroll. General liability will defend your consulting firm if you also appear as a third party in a lawsuit. It would be a shame if you had the opportunity to advise yourself on a big project only to be told: “It doesn't matter because you don't have liability insurance.” In fact, liability insurance can save your consulting firm thousands of dollars if your contract isn't enough.
