Professional Indemnity Insurance for Consultants
While professional indemnity insurance isn’t currently required under UK law, it’s certainly an insurance product that most businesses will want to consider. Professional indemnity insurance helps to protect you and your business should you provide well-intentioned advice to a client that could later be argued to be a contributing factor towards the decline of the client’s business, or towards any unfortunate financial or reputational situations that the client may find themselves in. This could, for example, relate to an estate agent who has valued a property at a certain amount, and yet the seller struggles to sell for the asking price. Professional indemnity insurance is essential for many sectors – real estate, health and beauty, building and plumbing etc – but it is, perhaps, most beneficial for management consultants.
The Risks of Management Consultation
For management consultants, there are many risks within the industry. The most common are:
Sometimes, it happens. We can’t all be perfect, and there are times when a consultant may provide well-intentioned advice to a client that ultimately turns out to not be in their best interest, perhaps due to a lack of financial forecasting, for example. In this case, professional indemnity insurance can help to protect your business’ local reputation.
Even if a consultant provides advice that is beneficial, the issue with success is that it’s subjective. If a client is applying for financing, for example, a consultant can prepare accounts as necessary. If the client is refused funding by the bank, they could claim against the consultant. Professional indemnity insurance can protect you financially in case of a claim.
Unfortunately, some things have a tendency to come back and bite you on the bum, and consultancy is one of them! Under UK law, a consultant can be held responsible for their advice for 6 years following completion of the contract. If you’re blindsided by a claim from a job 6 years ago, professional indemnity insurance can help you fight back if necessary.
Loss of Fees
It’s not just a claim that could leave you out of pocket, it’s a loss of fees suffered by the client, too. If a client claims that advice provided by a consultant was directly responsible for a loss of fees, and if these fees cannot be written off, the consultant may be deemed responsible. It’s essential to protect your assets with professional indemnity insurance.
Protecting Yourself, and Your Business
The good news is that there are ways that management consultants can help to protect themselves, particularly through ensuring they obtain a solid contract of work and maintain comprehensive records for at least 6 years following completion of work. However, it’s also important to have good professional indemnity cover should the worst happen. At compareyourbusinesscosts.com, we’ll help you to find the best deals on the web, meaning you can protect yourself and your business without paying a fortune!