How Consultant Insurance Works

Author : KV Smith | Published On : 20 Nov 2021

Even if you are an independent consultant without employees, you are still exposed to many of the same risks as a larger business. This is why having consultant insurance is a must. Ensuring the right policies are in place can protect you and your business from a variety of potential risks and threats.

Insurance Coverage That Protects the Self-Employed

Freelancers and consultants sometimes make the mistake of thinking that because their business is relatively small, they don't need insurance. This couldn't be further from the truth. If anything, self-employed individuals who do not have the protection of working under the umbrella of a larger company can be exposed to additional risks.

While a consultant might not need as much insurance as a larger business, the self-employed can usually benefit from similar coverage but on a smaller scale. For this reason, a consultant's policies will be much more affordable than those required by a large employer.


What Insurance Does a Consultant Need?

The two most basic forms of insurance required by any small business are professional liability and general liability. These two policies combined will protect you in all the most commonly occurring scenarios that consultants might find themselves in. Having cyber insurance is also a great idea because small businesses are at particularly high risk for cyber fraud and system hacking.

As a general rule, consultants need coverage for any business liability, client damages, property loss, and any damage that might occur to the equipment and tools they need to get their job done.


Investing in the Right Consultant Insurance Plan

Your insurance broker can help you to determine how much coverage you need, but it's always safer to plan for the worst-case scenario. Legal fees, damages, court costs, and settlements can add up in a hurry. You will want to stay within your budget but still ensure you have adequate coverage to safeguard your assets.


What Situations Will Be Covered?

If you have the standard insurance package that's recommended for consultants (professional liability, general liability, and cyber protection), you will be covered in the following scenarios:

  • Any property damage incurred at your place of work or at a client site
  • A client injuring themself on your premises
  • A client claiming negative consequences from a service or advice you provided
  • Your computer system and client data is the victim of a cyber attack
  • You are accused of advertising injury, reputational harm, or copyright infringement
  • Equipment that you need to get your job done has been lost, damaged, or stolen
  • You are accused of negligence by a client


When Insurance Is Not Optional

In many cases, being insured is not just a prudent choice but a necessity of doing business. Financial lenders, certain clients, landlords, and licensing boards often ask for proof of insurance before doing business or signing contracts.

Whether insurance is strictly required or not, making sure that your business and its assets are protected is essential. Having the right combination of insurance policies in place can save you from the terrible financial fallout that can occur in any number of commonly occurring scenarios. To get a quote in less than three minutes, visit our online application.