Consulting Business Insurance Cost Analysis
How Much is Business Insurance for Consultants?
From management consulting companies to market research experts, consultants tend to work with highly sensitive information, offering recommendations on make-or-break business decisions. To protect themselves from a lawsuit if their advice leads to less-than-ideal financial outcomes, they buy a variety of business insurance policies. The most popular include Professional Liability Insurance, General Liability (or a Business Owner's Policy, which bundles General Liability and Property), and Workers' Compensation. Many also buy Fidelity Bonds.
Read on for an overview of business insurance costs for consultants.
HOW MUCH IS
Professional Liability Insurance?
How Much is Professional Liability Insurance for Consultants?
The cost of Professional Liability Insurance depends on the coverage limit they choose. Policies with higher coverage limits cost more than policies with lower limits. Before we look at cost, let's see which policy limits folks are choosing.
The consultants who shop at insureon pick policies that range from limits of $250,000 aggregate / $250,000 occurrence to $5 million aggregate / $5 million occurrence. The most popular plan, though, is the $1 million / $1 million plan — 66 percent of our consultants choose this policy.
Regardless of policy limits, the average cost of Professional Liability Insurance for a business consultant is $853.79 per year, with a median cost of $713.00. See the chart below for a breakdown of policy cost by limits chosen. (Hint: hover over the bars for exact costs).
HOW MUCH IS
General Liability Insurance
How Much is General Liability Insurance for Consultants?
Like most small businesses, consultants prefer General Liability Insurance policies that have a limit of $2 million aggregate / $1 million occurrence. In fact, 86 percent of consultants choose a GL policy with these limits. Only 13 percent choose a policy with $4 million / $2 million limits and just one percent select $2 million / $2 million.
The average annual cost of a $2 million / $1 million General Liability policy for consultants is $482.25, with a median price of $425.00.
HOW MUCH IS
a Fidelity Bond?
How Much is a Fidelity Bond for Consultants?
Fidelity Bonds are a tricky policy to quantify because they vary so widely based on the needs of the client. Most often, clients require consultants to carry a Fidelity Bond if they'll be working with financial or banking data. The bond acts as a financial guarantee on the honesty of the consultant: if the consultant should use their access to sensitive accounts to commit wire fraud or theft, the Fidelity Bond can compensate the client for the losses. Not sure whether you need a Fidelity Bond? Here's a good rule of thumb: if your client hasn't requested that you have one, you probably don't need it.
The cost of Fidelity Bonds for consultants ranges from $350.00 to $1,750, with an average cost of $1,022.54 per year. The median cost is $1,034.00.
HOW MUCH IS
How Much is a Business Owner's Policy for Consultants?
Consultants who choose the BOP most often pick the one with $2 million / $1 million General Liability limits. This makes sense: BOPs offer a way to bundle GL with Property Insurance for a discount on both. It's only natural that most popular GL limit would be the most popular BOP liability limit as well.
BOPs range in price from $400.00 to $2,500.00 per year. The average annual cost of a BOP with the above limits is $633.21, with a median cost of $500.00.
Finding the Right Insurance Policies
Consultants and the businesses they run come in all shapes and sizes, so your insurance will have to be tailored to fit your risk profile. The cost of your insurance depends on a variety of factors, including the…
- Size of your consulting firm.
- Types of risks your business is exposed to (e.g., data security, property damage, workplace accidents).
- Number of employees you have.
- Revenue you earn.
- Insurance claims you've filed in the past.
Why do these factors affect your rates? The cost of your insurance reflects how much risk your business has. For instance, a public speaker typically has less business risk than an energy consultant who contracts with multimillion-dollar companies. Because the energy consultant could be sued for larger damages, their business insurance will need to be larger than the public speaker's. Visit our profession-specific pages for a more detailed look at how much business insurance typically costs consultants like you: