Insurance for management consultants

Why do management consultants need professional indemnity insurance?

Now's a good time to remember an old saying. The one about 'best laid plans'.

Regardless of the type of project you’ve taken on, whether it’s to do with business finances, HR, organisational change, or technology, things can always go wrong. Even if you do everything right.

A client could misinterpret your advice, wider geopolitical or financial forces could cause something unexpected, or you could just make a genuine mistake.

When things don't go according to plan, it won't be long before fingers are pointed in your direction. Accusations are made, solicitors are involved, and before you know it, you’re up to your ears in legal fees and admin.

That's where professional indemnity insurance for management consultants comes in. It takes the pressure away from having to handle your own defence. And pays your legal fees and any compensation you might owe. Even if you’re found to be at fault.

How much professional indemnity insurance do management consultants need?

Neither the Institute of Consulting nor the Management Consultancies Association specify a particular or minimum level of cover. So it’s up to you. Problem is, where do you start?

The thing to bear in mind is that, despite apparent similarities, every management consultant is different and does different things. What’s right for some isn’t right for all and you need to think about what you do, as well as who you do it for and how much it’s worth. In your worst-case scenario, what could go wrong? What’s the most expensive mistake you could make?

If budget allows, you can never have too much cover. Defending you can cost tens of thousands of pounds – and that’s before you add the compensation bill from your client too. Your management consultants’ professional indemnity insurance should be enough to cover all this.

It’s a tricky one to get right. Have a read of this guide or call us if you need more help.

What does professional insurance cover management consultants for?

Put simply, negligence claims and allegations made against you by clients and third parties. These will usually be because of mistakes you’ve made or things you’ve failed to do.

It depends on the policy wording, but typically you're also covered for:

• Defamation – eg you complete a project for a client. Shortly after, you appear on a popular podcast and speak openly about your experience with them, some of which isn’t in such a favourable light. They accuse you of publicly defaming their business.
• Intellectual property infringement – eg a client accuses you of stealing a product idea from them after you worked with them on a product strategy project.
• Loss of documents or data – eg while working for a client, they provide you with sensitive project documents that, for security purposes, can’t be copied or distributed. Unfortunately, you lose your laptop, effectively wiping the only copy of the documents.
• Negligent misrepresentation or misstatement – eg you prepare a market forecast for a client, but don’t verify a key dataset properly. This leads to the report overstating demand and underestimating competitor growth, making any recommendations that come out of it potentially damaging for your client.
• Employee dishonesty – eg you employ a junior consultant to help you manage your workload. While working on a project for a client, your junior submits false expense claims to the client.
• Breach of confidentiality – eg a client hires you to help them plan a potential company acquisition and asks you to sign a confidentiality agreement. Several months later, the news is leaked to the press. They suspect you may have breached your confidentiality agreement.

What additional protection do management consultants need?

If you have any employees, employers’ liability insurance is a legal requirement. If an employee suffers an injury or illness as a result of working for your company, they can sue it for damages. Your insurance can cover their compensation, plus any legal fees.

If you visit clients, or they visit you, consider getting some public liability insurance. This covers you if someone is injured, or their property is damaged, and you’re to blame.

Office and property insurance covers the things in your office (furniture, plants, fixed IT equipment etc) and portable equipment insurance covers gadgets and technical equipment away from the office (laptops, tablets, projectors etc). If you’re not sure it’s worth insuring, add it all up – it’s probably worth more than you think.

You should also consider legal expenses insurance. It’ll pay for a legal firm to defend your legal rights for a variety of reasons. Like a client refusing to pay an invoice, or an employment dispute. It’ll even reimburse you for your lost earnings if you’re summoned to jury service.

Business interruption insurance means you can still work when your office is out of action. Be it flood, fire or flea infestation, you’re covered for the costs of setting up elsewhere and for any lost income in that time.

Ever store data or sensitive documentation for your clients? Cyber insurance protects you if you suffer a data breach by paying for technical experts to help you recover, a legal team to help you manage any fallout, and a PR team to safeguard your reputation. It also pays for any compensation you might owe.

Why choose us?

We know business insurance. And we know how to deliver a stress-free and quick service that can sort out your insurance in a few clicks.

The best part? You can do it all online. From getting a quote to having your documents delivered straight to your inbox.

Don’t worry, though. Our expert advisers are on-hand to answer any questions you might have. Just give us a call.

You won’t have to tackle jargon with us, either. We always speak in plain English and keep everything as simple as possible.

As a bonus, you’ll also get some extras with your insurance:

• An “I’m Insured” badge that you can use on your website
• A bit of extra cash whenever someone you refer to us buys a policy
• An advice hub with loads of helpful tips, guides, and insurance advice.

Still not convinced? Take a look at our customer feedback.