Consulting jobs are some of the most sought-after jobs in the working world. The truth is that such jobs—while they can be incredibly rewarding, both emotionally and financially—come with a certain degree of risk. Think about it for a minute: Consultants are people hired to give advice to companies and organizations. They are there to pinpoint problems and to find solutions for said problems by providing companies with an outside, objective point of view.
This might sound like the dream job for many people, and in a way it is. But what happens when a consultant’s advice turn up to be damaging to a business or an organization? While many of these businesses or organizations would not bother filing a lawsuit against the consultant, many of them would. If the consultant is not properly insured, this lawsuit could potentially prove to be fatal to their business. As a consultant, how do you prevent such error from backfiring on you? The answer is simple: You have to be insured—and you have to be insured adequately.
That’s right, if you’ve been neglecting going over the many different types of insurance policies available to you, now might be the time to do it. Among those policies you will find that the professional liability insurance for consultants has the potential to save you lots of trouble down the road.
So what is that policy exactly, and why should you bother with it? If you take a look at the example above, you will have your answer. A professional liability insurance policy, in simple terms, protects consultants from financial loss associated with errors and omissions. In our example, the consultant gave advice that ended up damaging a business—how exactly such advice can end up damaging a company depends on the consultant and the company, but the fact remains that it did. The company then decided to file a lawsuit against the person. As an uninsured consultant, this should be your biggest worry. After all, what tells you that this person in our example can’t be you tomorrow? In this scenario, you would have no other choice but to go bankrupt.
For the insured consultant, however, this is when the claim process comes into play. So to answer the original question: Yes, consultants need professional liability insurance coverage, and they need it as soon as possible.