Why do HR consultants need insurance?
HR consultants are in demand as companies focus on improving employee relations and company culture. However, an unresolved conflict or failure to comply with employment regulations could lead to a lawsuit. Small business insurance tailored for human resources consultants protects against legal costs and other financial losses.
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What types of insurance do HR consultants need?
These insurance policies cover the most common risks of HR consulting.
Professional liability insurance
This insurance covers legal expenses if an HR consultant is sued for a mistake or oversight, such as failure to comply with employment regulations. It’s also called errors and omissions insurance (E&O).
- Consulting errors and oversights
- Advice that caused financial loss
- Professional negligence
General liability insurance
A general liability policy covers basic third-party risks, such as a client who trips and suffers an injury in your office. It’s often required for a commercial lease.
- Slip-and-fall accidents
- Damaged customer property
- Libel, slander, and copyright lawsuits
Business owner’s policy
A business owner’s policy, or BOP, combines general liability coverage with commercial property insurance, typically at a lower rate than if the policies were purchased separately.
- Customer bodily injuries
- Business property damage and theft
- Business interruption incidents
Workers’ compensation insurance
State laws require workers’ comp for HR consulting firms that have employees. It also protects sole proprietors from work injury costs that health insurance might deny.
- Medical expenses for work injuries
- Employee benefits for disabilities
- Legal fees from employee injuries
Cyber insurance
This policy helps human resource professionals survive data breaches and cyberattacks. It’s strongly recommended for any business that handles Social Security numbers or other sensitive data.
- Data breach lawsuits
- Notification of affected clients
- Fraud monitoring costs
Commercial auto insurance
Commercial auto insurance covers costs if an HR consultant's vehicle is involved in an accident. Most states require this coverage for vehicles owned by a business.
- Property damage caused by your vehicle
- Auto accident injuries
- Vehicle theft and vandalism
How much does HR consultant insurance cost?
A small business with a few consultants will pay less for insurance than a larger HR consulting services company.
Average costs for HR consultant insurance premiums include:
- Professional liability: $46 per month
- Cyber insurance: $129 per month
- General liability: $29 per month
The following factors can affect premiums during the underwriting process:
- Services offered by your HR consultancy
- Business property and equipment
- Business location and annual income
- Types of insurance purchased
- Policy limits and deductibles
- Claims history
How do I get HR consultant insurance?
It's easy to get business insurance as an HR consultant or recruiter if you have your company information on hand. Our application will ask for basic facts about your business, such as revenue and number of employees. You can buy a policy online and get a certificate of insurance with Insureon in three easy steps:
- Complete a free online application
- Compare insurance quotes and choose policies
- Pay for your policy and download a certificate
Insureon's licensed insurance agents work with top-rated U.S. providers to find the right insurance coverage and fidelity bonds for your HR consulting firm, whether you work independently or hire employees.
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Common questions about HR consulting insurance
Review answers to frequently asked questions (FAQs) about insurance for HR consultants and more.
Do I need business insurance if I'm self-employed?
While state laws might not require self-employed, independent consultants to have insurance coverage, having the right insurance can help you fulfill contract terms and keep you protected from financial risks and liabilities.
HR professionals might be required to carry professional liability coverage (sometimes called errors and omissions coverage or E&O insurance) in certain states before starting a consulting practice or working at certain organizations.
It's also important to keep in mind your personal auto insurance likely won’t cover work-related incidents. This would include a car collision involving a business-owned vehicle. Because of that, you may have to pay hefty medical bills or state penalties for not having commercial auto insurance coverage.
Additionally, carrying a workers’ compensation plan, even if you're a sole proprietor or limited liability company (LLC) with no employees, can financially protect you if you’re unable to work due to an on-the-job injury or illness. It'll also cover your medical bills, since your personal health insurance won't pay for on-the-job injuries and illnesses.
Am I required to get a consulting certification or license for my HR consulting company?
Consulting businesses of any kind, including HR consultants, education consultants, and management consultants, usually need a license to operate legally in most states.
Depending on your location, you may have to apply for your business license through your city, county, or state government. You may also need to obtain a special permit or industry-specific certification, depending on your state, consulting services, and the clients you work with. Being a licensed business offers many perks, such as tax compliance, credibility, and financial benefits and credits.
Another great way to showcase your expertise to prospective clients and help you stand out from the competition is to continue your HR consultant education.
You should consider the PI Talent Optimization Certification, which trains you in both hiring and people management. It’s a good option for HR consultants who are just starting their consulting practice and wish to add to their credentials.
Additionally, with the right credentials, which include a bachelor's degree and at least 10 years of experience in HR, you can become a Certified Human Resources Consultant. This certification through the Human Resources Management Institute proves your expertise in several areas, including compensation and benefits, employee productivity, and HR audits and standards.
What other insurance policies should HR consultants carry?
Human resources consultants should consider the following types of insurance products as part of their risk management plan against common risks and potential financial losses:
- Hired and non-owned auto (HNOA) insurance offers liability protection for sole proprietors or employees who drive their own vehicle for work, or a leased or rented vehicle.
- Business interruption insurance covers financial losses if your business is forced to close temporarily due to a fire or extreme weather. It can often be added to a business owner's policy (BOP).
- Commercial umbrella insurance handles legal expenses when the limit is reached on another liability policy, such as general liability, commercial auto insurance, and employer's liability insurance. Sole proprietors may need this coverage to meet client requirements for higher liability limits.
- Fidelity bonds provide financial reimbursement for your customer, should an employee commit fraud or theft. Unlike an insurance policy, your business would have to repay the bond company.
- Employment practices liability insurance (EPLI) protects your small business when a worker sues over wrongful termination or another violation of employee rights. In the event of a lawsuit, EPLI will handle the legal costs. It can also be added as an endorsement to a general liability or business owner's policy.
- Professional indemnity insurance, also called professional liability or errors and omissions insurance, protects you in the event a client files a lawsuit against your business over an issue with your professional services, such as an error, mistake, or professional negligence.
- Technology errors and omissions insurance, sometimes called tech E&O or tech professional liability insurance, is a bundle of E&O with cyber insurance. This policy can help you with legal fees and court costs if a dissatisfied client sues you over your work performance or a third-party cyber incident. It covers the cost of customer notification, credit monitoring, legal fees, and fines.
- Intellectual property (IP) insurance provides vital protection against IP disputes in four types of intellectual properties – patents, copyrights, trademarks, and trade secrets. It ensures valuable intangible assets are safeguarded so businesses can focus on innovation and growth instead of worrying about costly legal battles.
How can I save money on HR consulting insurance?
The insurance industry has a wide range of pricing for the same policies, which is why you should shop around. You can start by reviewing free business insurance quotes from leading insurance companies with Insureon.
Our licensed insurance agents can help make sure you get the right, most affordable coverage for your HR consulting business. Most small businesses can get insured and download a certificate of insurance within hours of applying for quotes.