Why do management consultants need insurance?
Stay compliant with a contract
Most contracts you will engage with as a management consultant will stipulate you must have and show proof of professional indemnity insurance. This applies even after you finish your contract.
IR35 enquiries
If you contract via your own limited company you may be exposed to IR35 enquiries from HMRC.
Unpaid invoices and contract disputes
Most independent management consultants at some point face unpaid invoices or disputes over contracts.
Accusation of causing a financial loss
As a consultant your advice is often sought to solve a business issue, however you may be blamed that your recommendations results in financial harm to your client.
Professional indemnity insurance for management consultants
Professional indemnity insurance (PI) is cover for management consultants which provides legal assistance and covers associated expenses should you find yourself defending an accusation against you. It will also pay any compensation if you are found to be liable.
As a management consultant, you need to be an agile thinker who can provide complex solutions to your clients ever changing needs. However, despite your best efforts, briefs can sometimes go awry.
If your client feels your work or recommendations did not yielded the expected results the relationship may quickly turn sour. Heated discussions can deteriorate into legal disputes over money or reparations which leads to undue stress and financial worries. And, if someone calls your reputation into question, clearing your name can be time consuming and expensive.
This is when good professional indemnity insurance becomes a must-have.
What does professional indemnity insurance for management consultants cover?
Whether you work as a contractor or run your own business, professional indemnity insurance acts as a safe-guard between you and a business-busting fine.
Professional indemnity responds to accusations from unhappy clients who are suing you for compensation because they claim what you did caused them or their business harm.
Cover includes
- Failing your duty of care
- Acting negligently
- Giving the wrong advice or recommendation
- Confidentiality breaches
For example
- A client claims that your advice led to a reduction in sales
- Following your recommendations resulted in a significant drop in productivity
- The approach you suggested failed to yielded the expected results
- You accidentally released confidential information about your client
Professional indemnity also responds to accusations from unhappy clients regarding professional misconduct, negligence, duty of care breach, mistakes, confidentiality breaches and more.
And it’s not just the financial protection that management consultant PI insurance offers. Being in a challenging situation with a client can bring a lot of stress but knowing that you have a legal team behind you at all times dealing with the problem, can be life saving.
Switching your professional indemnity insurance
Typically, in the UK, if you cancel a professional indemnity policy, you can no longer claim against it.
Therefore, if you switch your management consultant insurance provider, be sure your new policy covers your past work; this is called “retroactive cover”.
Should I keep my professional indemnity if I take a break or retire from management consulting?
It’s wise to keep your professional indemnity if you’re taking a break or retiring from management consulting. Claims against professional misconduct can surface months or years after you delivered the work.
Remember: If you cancel your policy, your insurance coverage will end, including coverage for any previous work.
How long you keep your cover in place is up to you. Consider the type of management consulting you did and the likelihood that a client might bring a claim against you.
Public liability insurance for management consultants
If part of your job is visiting clients and carrying out work at their premises, or if you engage with their property in any way, you will want to make sure your livelihood is protected with public liability insurance.
What does public liability insurance cover?
Providing an even stronger level of support, public liability insurance will protect you against accusations of causing an accident leading to an injury or property damage to a client or member of the public.
This is the case while out and about in the course of your business but also at your own premises if you have any.
Cover includes
- accidental injury or death
- accidental property damage
For example
- During a work visit to your client’s premises, your actions may have led to someone’s injury
- A client visiting your workplace, missed a step or tried to walk through a glass door which resulted in their injury or damage to their laptop or phone.
Other useful insurance for management consultants
As a management consultant, the additional insurance coverage you need will vary depending on your circumstances. It's essential to assess your financial ability to replace or repair damaged computer equipment. Moreover, it's wise to plan for a possible legal dispute and to be prepared for a tax audit by HM Revenue & Customs.
Commercial legal expenses insurance
Most commercial legal expenses insurance will protect management consultants against various tax and legal issues you may encounter due to your profession, which are not covered by professional indemnity or public liability.
At Suited, we combined £100,000 of commercial legal expenses insurance with helplines and other tools to better assist you in dealing with these issues, and it’s part of your subscription.
Commercial Legal Expenses offers qualified advice and assistance with:
- Legal and accountancy matters concerning your business
- Criminal prosecution
- Compliance & regulation issues
- Unpaid invoices (over £200)
For example:
- HMRC flags you for an IR35 investigation
- You need legal help chasing a major unpaid invoice
- You need guidance on compliance issues for your business
Portable Electronics insurance
If you're working as a management consultant, it would be prudent to give some thought to portable electronics insurance.
This type of coverage offers you a vital safeguard against the risk of losing or damaging your important work equipment, or having them stolen. By taking out this insurance policy, you can mitigate the financial burden that an unexpected loss or theft could bring, and enjoy greater peace of mind and enhanced security in the process.
Management consultants we insure
Suited offers comprehensive insurance policies that cater to the needs of a wide range of management consultants, including:
- Company registrars
- Horticulture consultants
- Hotel consultants
- Outsourcing consultants
- Procurement consultants
- Public services consultants
- Risk consultants
- Strategic consultants
- and more..
hopping for management consultants insurance
It's worth keep the following in mind when shopping for your management consultant insurance provider:
Cheap management consultant insurance
Quality after-sales service is just as important as price when choosing management consultant insurance. At Suited, we prioritise quick response times and offer multiple contact options for easy accessibility.
Reputation of the insurer is important
When it comes to insurance, it's crucial to have a reliable provider that you can count on in times of need. At Suited, we understand this and only work with financially sound insurers that have an A+ rating for their payout reputation.
Run off and retroactive cover options aren’t always on offer
Some insurance providers do not offer cover for the past or the possibility to switch your professional indemnity to a runoff mode. At Suited we offer both.
Some policy wordings are restrictive or have high excess
Some insurance providers may offer attractive prices, but it often comes at the expense of the coverage you receive. With Suited, both our professional indemnity and public liability policies have a zero excess, ensuring that you're fully covered.
