What Insurance Do Consultants Need?

What Insurance Do Consultants Need?

July 27, 2023 / 5 mins read

As a consultant, your clients rely on your professional advice for their businesses. You could be providing your expertise on specific projects, business expansions, or mergers and acquisitions. Your consulting business needs to be protected with the right insurance.

There’s always a risk when you provide professional advice. You need a consultant’s insurance package for your consulting business.

Are you a consultant with a downtown office on King Street West, Richmond Street West, or on Yonge Street? Do you have an office on Bloor Street West, Cumberland Street, Avenue Road, or St. Clair Avenue West?

Are you located in Scarborough, Etobicoke, East York, North York, or York?

No matter your location in Toronto, the Greater Toronto Area (GTA) or anywhere in Ontario, your Western business insurance expert will give you top-notch advice and ways to save on insurance for your consulting business. We’ll get you customized insurance to protect what you have built.

You will need an insurance package if you do consulting work in the following areas:

  • Business
  • Manufacturing
  • Technology
  • Education
  • Human Resources
  • Management
  • Public Relations
  • Financial
  • Environmental
  • Immigration
  • Oil and Gas
  • Property/Real Estate
  • Life Coach
  • Among others

Consulting insurance helps protect you from these 3 claims:

1. You provided professional advice on a business expansion project for a client. The client says your research was poorly done and your advice caused the business merger to fail. Professional liability insurance may cover your legal defence fees as well as the cost of a successful lawsuit against you.

2. Cyberthieves hacked your office’s computer system and your clients’ personal information was stolen. Cyber insurance will help you pay the cost of restoring your system. You may also be liable for damages to third parties whose information has been stolen and you may have to pay for notification expenses to inform clients affected by a breach. Cyber insurance would also help with these expenses.

3. A client visits your office, slips, and falls on a wet floor and breaks her wrist. The client files a personal injury lawsuit against your firm. Commercial General Liability Insurance, also known as slip and fall insurance, could help cover the medical expenses and legal fees.

What is consultants’ insurance?

Insurance for consultants is a package of insurance coverages that protects you against the specific risks of providing your professional advice, such as claims of negligence or errors and omissions.

You can be held liable for your services without the right insurance package in place. You could face costly lawsuits that could harm your reputation and put you out of business.

How much will my consultant’s insurance package cost?

Factors that will influence the cost:

  • Years of experience
  • Annual revenue
  • Number of employees
  • Past claims

Here’s an insurance check list for your consulting firm:

  • Do you have the best business insurance rate for your business?
  • Do you have the right amount for your deductible and regularly review to make sure it’s the right amount for your business?
  • Is your number of employees up to date?
  • Are you using your personal car for business purposes?

At Western, we will save you time and money by doing the insurance shopping for you to find the right package at the right value for your consulting business.

What do I need in my consulting insurance package?

Professional Liability Insurance: It’s also called Errors and Omissions insurance.

This type of insurance helps protect your consulting business against claims involving charges of professional negligence or failure to perform your professional duties.

Professional liability insurance helps covers lawsuits alleging neglect, misconduct, or failure to deliver advice or services as promised.

Whether a claim is justified or not, defending a legal action can be expensive and have financial effects on your business.

Examples of professional liability insurance claims can include:

  • Work mistakes
  • Claims of negligence
  • Overspending
  • Undelivered service
  • Missing a deadline

Note that professional liability insurance typically does not provide coverage for:

  • Criminal, dishonest, or fraudulent acts
  • Incorrect estimates of profits or economic returns
  • Cost guarantees or price estimates

Commercial General Liability (CGL) Insurance: This type of insurance covers third-party property damage or bodily injury.

It can help you with a lawsuit alleging personal injury, false advertising, and libel or slander. It’s also known as slip and fall insurance.

CGL insurance generally helps cover medical fees, legal expenses, and settlements regardless of the outcome of a lawsuit by a customer against you.

Without commercial general liability insurance, you would be responsible for paying any liability costs out of your own pocket.

Cyber Insurance: As a consultant, you likely electronically store confidential data about your clients and you use email. This makes you a target for cybercriminals.

If your computer system is hacked, cybercriminals can sell the information or hold it for ransom. Without cyber insurance, you will have to pay out of your pocket for the cost of restoring your system. You may also be liable for damages to third parties whose information has been stolen and you may have to pay for notification expenses to inform parents affected by a breach.

Commercial Property Insurance: Do you have an office? This type of insurance can cover losses due to fire or lightning. You can also include vandalism and malicious mischief as part of your commercial property package.

To protect your business in the event of a sewer backup, you should consider adding sewer backup or overland flood coverage extensions, which standard business insurance policies typically do not cover.

Business Contents and Portable Electronics: These coverages protect your consulting business’s physical assets. Business Contents provides coverage for loss or damage to your office’s physical contents, such as equipment and technology. Portable Electronics insurance may help cover the cost to replace or repair portable electronics that are damaged or stolen.

Legal Expense Insurance: This coverage provides access to general legal advice with a lawyer and coverage for legal expenses. This type of insurance policy may cover legal costs associated with defending your legal rights relating to contract or employment disputes and debt recovery.

Commercial Auto Insurance: If you have a business car that you use as part of your consulting business, it needs commercial coverage as part of your insurance package. Your personal car insurance usually won’t cover your consulting business.

What do I do if I have an insurance claim?

  • Contact your broker immediately after any business-related mishap. Waiting to file a claim can confuse insurers about the severity of the damages to your business.
  • Know your policy so that when you contact your broker you are familiar with what will be covered or not.
  • Document the damage. Take photos right away and write down what happened.
  • Do not throw away damaged goods after taking photos. Keep the physical evidence so that your adjustor can see it.
  • Do not invite lawsuits. Don’t say anything that could be used against you, especially if you aren’t sure what happened.
  • Be honest about what your damaged property is worth. Damaged commercial property is generally valued according to its actual cash value or replacement value.

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