Professional liability insurance protects small businesses by covering legal defense costs, settlements, and judgments from client lawsuits claiming that work was unsatisfactory.
An oversight or mistake at your consulting business can cause financial setbacks or reputational damage for your clients. As a result, they may turn to the courts to recoup their losses. Professional liability insurance, also called errors and omissions insurance, can provide the coverage your business needs to stay in the black while addressing unexpected legal matters.
This policy provides liability coverage related to:
Even if you’re not at fault, being accused of a work mistake can be costly. If a client claims a consultant's inaccurate projection or other mistake caused financial damage, you may find yourself in an expensive legal battle. E&O insurance helps cover your legal fees – which can be hefty even for a frivolous lawsuit.
In consulting, project delays can have a significant impact on your client’s bottom line. If a client takes you to court over a missed deadline, your professional liability insurance policy could help pay for court costs along with the resulting judgment or settlement.
Clients usually have high expectations. If your work doesn’t meet their standards, you could be accused of professional negligence. When your consulting work is challenged, professional liability insurance helps pay for legal expenses, including the cost of hiring an attorney.
While professional liability insurance covers several risks inherent in the consulting industry, it does not offer complete protection. No matter your field of expertise – whether you specialize in management consulting or market research – accidents happen. Other policies to consider include:
Workers’ compensation insurance: This policy is required in almost every state for consulting businesses that have employees. It can cover medical fees and lost wages for work injuries.
Business owner’s policy: This policy combines general liability insurance with commercial property insurance, typically at a lower rate than if the policies were purchased separately.
General liability insurance: This policy covers the most common business risks: third-party injuries, third-party property damage, and advertising injuries.
Are you ready to safeguard your consulting firm with professional liability insurance or another policy? Complete Insureon’s easy online application today. Once you find the right policy, you can begin coverage in less than 24 hours.