Professional Liability Insurance for Consultants
As a consultant, you enter a new project to help a company reach their next goal. That assistance could be implementing a new process, adding updated software or providing the company with advice to meet their financial goals.
Yet, many fail to initially realize that their job and this project both have several factors at stake. The software might malfunction after you finish or your financial advice might lead the company closer to ruin. When this happens, the client pins the blame on you and decides to file a lawsuit.
Are you prepared for the financial hit of a lawsuit? Unfortunately, most contractors are not. However, being ready doesn’t have to be difficult. When you take out a professional liability insurance policy, you’re protected in these rare, but potential instances. What should you know?
The Basics
Also known as Errors & Omissions insurance, professional liability should be one of a few insurance policies you take out as an independent contractor; health insurance and a business owners policy (BOP) are the other two. While the BOP’s general liability component protects you against physical damage and injuries, the separate professional liability policy does the same whenever a client files a lawsuit regarding job duties or work performed.
Why You Should Have Coverage
Across all fields, professional liability insurance isn’t always considered to be a necessity. However, it’s something all contractors should have in case of the following, potentially financially devastating scenarios:
- A project doesn’t work out.
- Errors emerge months after you’ve completed a project.
- You miss a deadline.
- A client makes a baseless claim or alleges negligence regarding your work.
The legal fees associated with fighting your case could put you out of business, even if the client is fully in the wrong. In all cases, professional liability can cover these legal costs.
How Much Coverage Should You Take Out?
There’s no one-size-fits-all policy for contractors. Rather, to determine how much coverage you’ll need, ask yourself or work with an agent to determine:
- How many uncertainties are in your line of work? Generally, IT and finance consulting have greater risks than someone who consults on technical writing or graphic design.
- What types of clients do you work with? Do your clients expect you to have the same degree of coverage as their own?
- The types of contracts you sign.
Do you think you might need a professional liability policy? For more security in your work, explore your options with Ion Insurance. For more information, give us a call at 203.439.2815.
