But what happens if you as a Consultant give faulty advice and thereby cause damage to your client’s business?
It is possible, that your client will sue you for a lot of money. A potential risk for your livelihood, which you can provide against with an insurance for professional liability.
These are the questions you should ask yourself
High payment claims by the customer may have various reasons: the desired results are not provided at all, you withhold important information, your consulting is faulty….it always becomes critical for you whenever due to your actions, there are direct or consequential damages for your client.
Therefore you should ask yourself the following questions if you are a self-employed consultant
- What are the professional risks associated with my work as a Consultant? Am I insured for all of them?
- Are there industry-specific risks? Are these risks maybe covered by a membership with a professional association?
- Do I have a plan for when my client might claim compensation payments or law suits?
- Is there an insurance against claims for damages that have arisen in the course of my consulting work abroad?
While working as a freelance Consultant these scenarios are possible:
- You violated intellectual property rights, privacy rights or secrecy
- You have provided the contractually agreed obligation poorly, incorrectly or incomplete
- You have caused a damage or goods or injury of people
You cannot only violate obligations or cause damage yourself – you can also suffer damage, for example, if a client withdraws from a contract. Because of already occurred costs during preparations, a potential financial loss. Also this can be insured.
For which job groups does a professional liability insurance make sense?
You might think „ that won’t happen to me“. One way, to deal with risk.
But that thinking ends until it happens and a client actually sues you for alleged defects.
Well, then it is too late. Because as with all other insurances, you can’t insure what already happened. Maybe you will say “it’ll be fine” or you think that your job group is not at risk.
In fact, getting a professional liability insurance for freelancers makes sense i.a. for these groups:
- All consultants like management consultant, health care consultants, logistics consultants, PR and marketing consultants, business consultants, financial consultants, M&A consultants, organization and development consultants, process consultants, risk managers, project managers, quality managers and strategy consultants
- When working in the recruiting business as self-employed recruiting consultant
- When working in market and public opinion research
- Teachers, coaches, mediators and trainers
Was is insured and what is not
Depending on which insurer you choose, there will be different risks that are insured. Freqeuntly, these are the typcial risks you can insure:
- Financial losses
- Industry-specific risks
- Claims for damage caused by viruses or other malware transmission
- Insurance cover for legal or contractual liability claims
- Insurance coverage for personal injury or damage
- Insurance against violation of personal rights, property rights and copyright and of confidentiality
- Consequential damages by delayed performance
- Own damage component as personnel and material cost as a result of the premature project end
- Support for the defense of unjustified claims
- Coverage of legal costs, where appropriate, expert fees
Depending on the details of your insurance package this list can vary and you should make sure all needed risks are covered.
There are also independent insurance agents which will give you advice to your personal situation independent from a certain insurance company.
Get more not binding information here:
Insurance Broker Marco Mahling
+49 (0) 89 / 379107-11