Consultants are paid to provide their professional expertise on a specific topic, project, or industry. Several factors contribute to creating a successful consulting business, including consistent clients, marketing efforts, and networking. However, insurance coverage is often overlooked.
What can insurance coverage do for consultants?
It protects consultants against various risks, including unexpected events that can stop their business operations. Not having insurance coverage puts businesses at risk of losing their clients and having to pay more to remain in business.
“Our job as brokers is to ensure our customers get the best insurance protections,” said Theresa Arsenault, BrokerLink commercial insurance manager. At BrokerLink, we have access to different markets or insurance products. This means we can find insurance coverage that fits the unique needs of the consultant’s business. For example, we can find coverage to reflect that change if a consultant relocates their business from a home-based operation to an office.
If you provide consulting services, you’ll need a consultant insurance policy. However, several types of coverage are available, and it can be difficult to know which one(s) you should have. That’s why we have created a guide to business insurance coverage for consultants in Ontario and beyond. Let’s dive in.
Types of insurance coverage available for consultants
Even if you work independently, you are still considered a business. As a result, you need to cover costs on your own if something goes wrong. However, this isn’t the case if you have business insurance. Having coverage will protect you against financial loss and unexpected expenses such as legal defence fees and more. Business consultants aren’t always familiar with the insurance industry, and that’s completely understandable. That’s why we will discuss the various types of business insurance available in detail below:
Consultant professional liability insurance
Consultant professional liability insurance, also known as commercial general liability insurance coverage, helps protect a consulting business from liabilities that can cause the business to lose money. For example, if a customer gets injured after falling in a consultant’s office, the consultant is at risk of being sued. Review our article about the main types of business insurance to learn more.
Advertiser’s liability insurance
Purchasing advertiser’s liability insurance can also be beneficial for business consultants. This type of coverage can protect a business consultant if someone claims they stole their existing concept. For example, if a business consultant has a billboard ad and another organization claims the ad misappropriated its own advertising concept, the insurance coverage can prevent the financial loss of paying for legal fees.
Equipment breakdown insurance
Equipment breakdown insurance covers anything mechanical that can be considered under pressure. This can range from boilers and photocopiers to air conditioners. If equipment suddenly or accidentally breaks down, this type of insurance coverage helps cover the costs of repairs.
“This is important coverage because equipment breakdowns are often expensive,” said Arsenault. “Also, they damage the business’ operations and income.” Remember to review what equipment is covered by your insurance policy. Speak with a BrokerLink broker to learn more.
Business property insurance
If you have a physical office, you need business property insurance coverage. It doesn’t matter if you rent, own, or lease the space you’re working out of. You need to be protected in the event of property damage. Let’s go over some examples below:
Renting a space as a consultant
Consultants who rent a space may be subject to leasehold improvements. Basically, this means the consultant has to pay for building improvements outlined in their lease agreement. When this is the case, brokers ask for a copy of the lease to understand the consultant’s obligations as a tenant. This allows the broker to find an insurance company with a policy that suits the consultant’s needs.
Running a home-based business
Working from home is common for consultants. However, they must still account for incidents that can disrupt business operations, such as a power outage. Relocating to another space costs money. If this happens, business property insurance helps pay for the “extra expense” portion of business interruption insurance.
Operating the business near a potential risk
If a consultant operates their business in an area where there may be a risk, the broker will determine the type of insurance coverage necessary for protecting the business. For example, being close to a body of water may mean purchasing overland flood protection.
Business interruption insurance
If an unexpected event such as a fire occurs, business interruption insurance will come to the rescue. An example of a scenario is a power outage preventing a consultant’s computer from working. This can prevent access to email and result in potential business losses.
Professional liability and errors and omissions insurance
Professional liability and errors and omissions coverage will protect consultants if they make a mistake (an error) or forget something (an omission) when providing advice or services to a client. An error or omission could result in a lawsuit. If this happens, your insurance coverage will provide protection.
Cyber liability insurance
Nowadays, it’s not uncommon for consultants and other businesses and other cloud-based technologies to store their business and customer information. Despite being useful, these make consultants vulnerable to cyber attacks. If a server gets hacked, customer data or personal information about customers (e.g. credit card details or addresses) and the business (e.g. financial information) could be compromised.
If a consultant’s computer gets hacked, most clients will seek compensation to manage the damages caused by the hack. In turn, cyber liability insurance covers any damages that have occurred as a result of a compromised system.
“Also, if a consultant uses a third-party site to receive payments, and they do not have cyber security, they are responsible for any damages to their business or customer if a hack occurs,” said Arsenault.
Preventative measures are essential to avoid financial losses. Consultants and those in other professions should know about strategies to counteract such damages. Learn how businesses can protect themselves from cyber-attacks.
It’s not mandatory to purchase an insurance policy for your consulting business. However, it is helpful in the sense that it acts as an extra layer of protection. If you’re providing professional services, you need the right insurance coverage for your business in case a client sues. This is especially true if you own a consulting firm with a decent amount of assets. Speak with a BrokerLink broker for professional advice and to better understand the various insurance policies available for your business.
Reasons to purchase consultant insurance coverage
As a consultant, you pride yourself on your reputation for offering efficient, professional services. That’s why you need to review insurance policies and find one that protects your business’s interests. Why should you purchase a policy that includes liability coverage and other forms of protection? Here’s what you need to know:
Prevent financial loss
If a client decides to sue for bodily injury, the medical expenses can add up pretty quickly. That’s why you should look for a policy that provides compensation for third-party bodily injury. For more information, read our guide to third-party liability insurance. Otherwise, you’ll be stuck paying for the court costs if a client decides to sue for the costs of their potential medical bills.
However, it’s important to note that many factors come into play when purchasing insurance. Consulting businesses should have a general liability insurance policy, but there are other types of financial losses to look out for, including property damage. As a business owner, you will have to pay to replace any equipment that’s damaged if you don’t have insurance, which can cost you in the long run.
Yes, making a claim will increase your insurance premium. However, this is much more cost-efficient than paying for damages out of pocket.
Getting and keeping clients
If you’re providing consulting services, you need to acquire and maintain a client base to be successful. Many clients and companies are less likely to hire you if you don’t have insurance coverage. Whether you have a commercial office space or work from home, having an insurance policy will make you more reputable. Each industry has unique risks and you need to manage them to gain trust with your clients.
Contact BrokerLink to find the right insurance coverage for your business!
Whether you’re just opening your consulting business or updating your insurance coverage, having a broker can help. These professionals are knowledgeable about a plethora of subjects, including how to insure business vehicles and fleet insurance requirements. Additionally, you don’t have to shop around for the right insurance policy for your business.
Consultants can learn more about how insurance protects their business by contacting a BrokerLink broker. BrokerLink’s commercial insurance experts will find an insurance policy that suits the needs of your consulting business.
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