6 Types of Business Insurance You’ll Need When Working as a Consultant
Running a consultancy or simply working as a consultant can be very hectic. After all, running after clients and convincing them to do or buy something is never easy. Things get tougher when you have to deal with claims and lawsuits from your clients for doing something by mistake or for something that was out of your control in the first place. In such circumstances, you need insurance policies to back you up. Visit Website
If you’re a consultant or running a consultancy business, here are six types of business insurance policies you must have.
#1 Professional Liability Insurance
Often referred to as errors and omissions (E&O) insurance, a professional liability insurance policy is of utmost importance to consultants as it safeguards you against errors, claims of negligence, or omissions in your professional services. These claims could lead to financial loss for you and even stricter legal action in some cases if your clients are willing to go that far.
As a consultant, you’re likely to make mistakes once in a while or face unfounded acquisitions. However, that doesn’t mean that you have to suffer financially in the long run. Professional liability insurance coverage can help you with legal fees, settlements, and judgments as well, guaranteeing you and your consultancy firm financial security.
According to Huntersure, another action that could lead to a professional liability claim against you is the leaking of confidential client data. Even if you weren’t the one to leak the data, for instance, in the event of a cyber attack on your consultancy, you’d still be held responsible, leading to this claim from your client. Therefore, unless you have professional liability insurance, you’re going to be in a lot of trouble from different sides.
#2 General Liability Insurance
General liability insurance will protect you from third-party claims that arise from advertising injuries like copyright infringement or defamation, bodily injuries, and property damage.
For instance, say that you're a marketing consultant who’s holding a meeting at their office. Once your client arrives, they end up slipping on a wet floor and injuring themselves. In this case, you’ll have to pay for the client’s medical bills as the injury happened on your premises. If you have general liability insurance, it’ll cover those expenses for you.
#3 Cyber Liability Insurance
As reported by the BBC, cyber crimes will cost the global economy $10.5 trillion by 2025. The United States, like many other countries, will also be affected. Apart from small and medium-sized businesses, many large enterprises and government agencies will also be affected.
Recently, CNN reported that US government agencies have been hit with multiple cyber attacks by Russian cybercriminals. In the future, the scale of these attacks will only grow, given that countries like China and North Korea aren’t too fond of the US. Who is to say the impact of these global attacks won’t fall on your consultancy business?
When you have cyber liability insurance coverage, it will protect your business from financial and reputational damage should you ever have to face cyber attacks, data breaches, or any other type of cyber incident.
This policy covers costs associated with data breaches, including forensic investigations, notification expenses, credit monitoring, and legal fees. It also provides coverage for potential lawsuits resulting from data breaches or unauthorized access to confidential client information.
#4 Business Property Insurance
Consultants who operate out of a physical office or own business equipment should consider business property insurance. This policy protects your office space, furniture, computers, and other assets against perils such as fire, theft, vandalism, or natural disasters.
If your office is damaged or your equipment is stolen, business property insurance can cover the cost of repairs or replacement, allowing you to quickly get back to work. Otherwise, you’ll have to spend money out of your own pocket to get everything back in order, which will not only cost you money but a lot of time as well in some cases.
#5 Business Interruption Insurance
Unforeseen events like natural disasters or accidents can disrupt your consulting practice and lead to significant financial losses. Business interruption insurance provides coverage for lost income and ongoing expenses during periods of business interruption or temporary closure.
For instance, if your office is damaged by a fire and you're unable to work, this insurance would compensate you for the income you would have earned during that time. It also covers expenses such as rent, salaries, and utilities, helping you stay afloat until you can resume operations.
#6 Workers' Compensation Insurance
Workers’ compensation insurance covers medical fees, disability benefits, and lost wages for your employees who might end up with work-related injuries or illnesses. This policy not only protects your employees but also protects your consultancy business from potential lawsuits arising due to workplace injuries.
Having workers’ compensation insurance helps you ensure that your employees are well taken care of. It also showcases your commitment to their overall well-being and how invested you are in their lives in general.
According to Forbes, business insurance will cost you anything from $14 to $124 per month. The costs vary depending on the type of coverage you opt for. However, many consultancies avoid getting insurance, thinking that it’s nothing but an additional and rather unnecessary expense.
However, as you can tell from our discussion so far, insurance is of utmost importance for your consultancy firm. Without it, you’ll have to deal with a lot of legal trouble as well as suffer financially.
