With many companies downsizing or moving overseas, a growing business segment has been management or business consultants. Many specialized employees of these companies have opted to stay in their location and set up a consulting firm.
Often, several employees from one company are joining together to pool resources. Like any other business, these new businesses need business insurance to protect the business owner, the assets, and viability of the consulting company.
As a management or business consultant, your clients are looking to you for advice and your experience to help them make strategic decisions and policies based on that input from your firm. This type of practice can certainly expose your business to a higher exposure risk and potential liability.
First and foremost, any consulting business needs to look at professional liability insurance, sometimes known as errors and omissions insurance, or E&O insurance. This type of insurance covers the business against claims of negligence and errors while performing professional work.
Management consultant insurance will help consultants in a claim in which their client is unsatisfied with the performance or outcome of the recommendations implemented by the client. This will also protect against claims relating to the perceived value of the service provided or financial harm as a result of implementing the recommendations.
In addition, the management consulting business will need a general liability insurance policy which addresses claims of bodily injury or property damage. This policy doesn’t protect against professional liability claims. The consulting business will also need to have a property insurance policy to protect the physical assets of the consulting business from damages or loss. In the event the consulting business hires employees, then workers' compensation insurance will be needed as well.
Opening a management consulting business can be rewarding. Make sure to protect the business by speaking with a licensed insurance professional to determine the risk and how best to protect the business from that exposure.
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