Workforces have changed. Today, consultants are commonly found in strategic roles across businesses. The evolution began long before the pandemic. Decades ago, management consultants began to stake out functions where they could step into companies and other organizations, teaming with their management to map strategies to cut costs, improve customer relationship management, leverage data analytics, introduce new business processes, introduce new technologies, augment skillsets, make supply chains and procurement more efficient and effective, and in some instances, assume responsibility for functions, such as public relations, payroll or external workforce management. Those are just some of the ways in which management consultants engage with organizations.
Large or small, management consultancies must manage the risks that accompany their operations. If you own a management consultancy, your WizdomOne insurance team can help you analyze and mitigate the risks with the right insurance coverage. We will also touch base with you regularly to understand how your business is evolving and consequently, & how your insurance needs are changing.
What coverages does a management consultancy need?
Professional liability coverage. As is true of other professionals, consultants are hired for their experience and knowledge. Irrespective of their expertise, mistakes happen. Someone misses a detail, or something happens that has a negative financial impact on the consultant’s customer. The customer sues if they believe the consultant failed them and cost them money. That leads to legal expenses and more if a court finds in favor of the plaintiff. In some instances, such a lawsuit could jeopardize the consultancy’s business and put an individual’s assets at risk, depending on court costs and the damages awarded to the customer.
General liability insurance. If someone is injured on the job; if property is damaged by an individual working for the consultancy; or if remarks are made that are thought to be slanderous, general liability insurance can provide protection, particularly if legal action is taken. Costs can mount whether a consultant is at fault or not, and, as in the case of a professional liability claim, a court award can be sizeable. General liability, also referred to as errors and omissions (E&O) policies, can help consultants protect their business and its assets.
Additionally, when engaged by a company, government agency or other organization, a consultant may be required to demonstrate that they have a certain amount of liability insurance before a contract is signed.
Property insurance. In the event of a fire, a natural disaster or theft, it’s important that your property is insured. In addition to rebuilding or repairing a facility, equipment may need to be replaced or an alternate work site may be required for the short term so that work can continue, making it possible for the consultancy to fulfill its contractual obligations even as a facility is being repaired or rebuilt.
Clauses in these policies vary. Coverage for lost revenue may be included. Your agent can assess your needs and determine which marketplace policies will be most appropriate for your management consultancy.
Directors and officers liability insurance. A sole proprietor may not need this type of policy, a consultancy with directors and officers will most likely want the company to insure them in the event they need to defend themselves against a lawsuit or other legal costs associated with actions involving criminal or regulatory proceedings.
Cyber risk insurance. Given the growth in cybersecurity crime, nearly every business needs this coverage, and management consultants are no different. They handle customers’ proprietary information or even personal data. As explained by the U.S. Department of Cybersecurity & Infrastructure Security Agency, this insurance helps organizations mitigate against the risk of a cybersecurity incident whether it damages an organization’s network, brings business operations to a halt or a hacker accesses proprietary or personal data. Such coverage is usually not included in liability policies.
Automotive or fleet insurance. If a consultant or its employees drive a company vehicle or rent vehicles that are operated while doing the consultancy’s business, the company will need automotive or fleet insurance. The policy may need to include comprehensive, liability, medical and property coverages.
Other potential insurance needs. If a consultancy has employees, the business will need to look at coverages for them. Among those are: workers’ compensation, healthcare, life insurance and disability coverage.
While management consultants have much to consider as it relates to insurance and risk mitigation, the good news is that independent agents are available to help evaluate what coverage is needed and to identify the policies that will best meet the consultant’s needs.