What insurance do consultants need?
May 23, 2017 3 minute read
Consultants are individuals who are paid to provide their professional expertise, typically on a specific topic, project and/or industry. There are many factors which contribute to a successful consulting business such as consistent clients, marketing efforts, and networking. Another factor for success is getting the right insurance coverage.
Insurance protects consultants against different risks, such as unexpected events which stop their business operations – which in turn, impact their clients and increase costs.
“Our job as brokers is to ensure our customers get the best insurance protection,” 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 which fits the unique needs of the consultant’s business. For example, should a consultant relocate their business from a home-based operation to an office, we can still find coverage to reflect that change.”
For consultants to protect their businesses, consider these seven types of insurance coverage.
Insurance and consultants: seven coverages to consider
1. Commercial general liability insurance
Commercial general liability insurance coverage protects a consulting business from liabilities which cause the business to lose money. For example, should a customer become injured because they fall in a consultant’s office, the consultant could be sued. Check out our article about the main types of business insurance to learn more.
2. Advertiser’s liability insurance
Another beneficial coverage is advertiser’s liability insurance. This coverage can provide protection for consultants should someone claim the consultant stole their existing concept. For example, if a consultant had a billboard ad and another organization claimed the ad misappropriated their own advertising concept, the consultant could be sued.
3. Equipment breakdown insurance
Equipment breakdown insurance covers anything which is mechanical and under pressure. This includes boilers, photocopiers and air conditioners. Should equipment suddenly or accidentally break down, this coverage could cover the cost of repairs.
“This is an important coverage because equipment breakdowns are often expensive,” said Arsenault. “Also, they damage the business’ operations and income.”
To learn more about what equipment would be covered by a policy, it’s important for consultants to speak with a BrokerLink broker.
4. Business property insurance
Business property insurance protects consultants from risks associated with the physical location of their business and whether or not they own, rent or lease space for their business. Here are some examples:
- Renting space as a consultant: for consultants who rent space, they may be subject to leasehold improvements –where they may be required to pay for building improvements outlined in their lease. In this scenario, brokers often ask for a copy of the lease to understand the consultant’s obligations as a tenant. This will help a broker find the proper insurance coverage.
- Running a home-based consulting business: home-based consultants still need to consider business interruptions – incidents (such as a power outage) which disrupt their business operations. If the consultant needs to relocate because of a business interruption, they will need to pay for another location – which will be protected by the “extra expense” portion of business interruption insurance.
- Operating the business near a potential risk: should the consultant operate their business in an area where there may be a risk this will determine the type of insurance coverage a broker will need to find to protect the business. For example, being located by a body of water may mean considering overland flood protection.
5. Business interruption insurance
Business interruption insurance coverage deals with events, such as a fire, which stop the consultant from running their operations. For example, if there was a power outage, a consultant’s computer may not work. As a result, they may not be able to access their email, and therefore, lose potential business.
6. Professional liability and errors and omissions coverage
Professional liability and errors and omissions coverage protect consultants in the event where they make a mistake (an error) or forget something (an omission) when they offer their services to a client. The consultant’s error and/or omission could result in a lawsuit. Should this occur, this coverage could provide protection.
7. Cyber insurance
With more consultants and businesses using servers and cloud-based technologies to store their business and customer information, there are more risks of cyber-attacks. Should a server be hacked, customer data or personal information about customers (i.e., credit card details or addresses) and the business (i.e., financial information) could be compromised. If a consultant’s computer is hacked, there will be costs to manage damages because of the hack. Cyber insurance covers damages incurred because 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 Aresenault.
Preventative measures are always key. Learn how businesses can protect themselves from cyber attacks.
Consult a broker
Consultants can learn more about how insurance protects their business by contacting a BrokerLink broker. BrokerLink’s commercial insurance experts will find insurance which fits the needs of the consultant.