How can Professional Liability insurance help protect consulting businesses?
For some consultants, professional liability insurance can be required by law for licensing, client contracts or to offer your professional services.
Even if it’s not required, this type of insurance can be useful for self-employed business consultants, IT consultants, software developers, management consultants, marketing consultants or education consultants who are paid for their expertise or advice.
Consultant professional liability insurance could help your consulting firm cover the costs of:
- Business mistakes that cost clients money
- Claims of professional negligence
- Misrepresentations that cause financial harm
- Legal defense costs
Note that for some types of consultants, professional liability insurance is called errors and omissions insurance, or E&O insurance.
What can Professional Liability insurance cover?
These are some of the common risks that business consultants, accountants and financial professionals, engineers and architects could be exposed to at work:
Professional mistakes
Imagine you accidentally miss a deadline, make a mathematical error or miss a typo on important contracts or financial documents.** Professional liability insurance can help protect you from paying for court costs or legal fees out-of-pocket if you or your employees are accused of making a professional mistake that causes financial harm to another person or business.
Claims of professional negligence
You may be accused of claims of negligence or occupational negligence — meaning doing something or failing to do something that would be in the best interest of your client.
If this happens to you, your professional liability insurance policy could cover some expenses up to your policy limits.
Misrepresentation
This is when someone accuses you of providing inaccurate information with your services — and they take legal action against you.
Legal defense costs
Whether you’re found at fault or not, you could be forced to defend yourself if your business actions cause a client a financial loss. You may face the cost of hiring a lawyer to defend your business after you’re accused of a professional mistake.
How much does consulting liability insurance cost?
The cost of professional liability insurance (also called the premium) for consulting businesses can depend on a number of factors, including:
- How many employees you have
- Your payroll expenses
- Your claims history
- How long you’ve been in business
- The state where you work
ERGO NEXT offers tailored, affordable professional liability and errors and omissions insurance (E&O) that provide the right coverage for your business. The best way to see exactly what you’ll pay for your business is to get a free, no-obligation insurance quote.
Is Errors and Omissions insurance for Consultants (E&O) the same as Professional Liability insurance?
Professional liability coverage and errors and omissions insurance are the same policy under a different name. They can both help protect you if you’re accused of making a professional mistake that leads to a financial loss for a client.
The name can be different depending on your industry.
- Professional liability insurance is usually the name for coverage for accountants, consultants, engineers and architects.
- Errors and omissions insurance is the professional standard for real estate and insurance agent professionals.
What other types of business insurance coverage could benefit consulting companies and small business owners?
- General liability insurance can help provide financial protection for some of the most common business accidents, such as accidental property damage to other people’s property and workplace injuries to non-employees.
- Cyber liability insurance, an optional add-on to general liability or professional liability coverage, could assist with costs around cybersecurity issues and data breaches around sensitive client data, such as contact information and financial statements.
- Workers’ compensation insurance, mandatory in most states if you have employees, can help cover costs and lost wages for employees who suffer a work-related illness or injury.
