Business consultants are employed by all kinds of clients to help resolve all sorts of problems, devise new strategies and help set new goals. As a result, they are working at the cutting edge of the clients’ business, its financial health and its long-term success.
If you are a business consultant, therefore, you are likely to find that you shoulder an onerous responsibility in providing clear, impartial, well-informed and accurate advice. On the basis of your findings and recommendations small businesses and large corporations may take decisions which fundamentally change their evaluation of commercial opportunities, the way their organisation is structured, or particular heads that need to be hunted.
Business consultancy is a role that not only carries considerable responsibility, but also the potential for significant financial loss to the client if poor advice is given or mistakes made by the consultant.
By holding him or herself out to be a professionally qualified business consultant, the individual has a duty to ensure that any evaluation, advice or recommendation is of a standard reasonably expected of any other individual in that profession. In other words, a certain professional standard must be maintained and this extends to taking steps to ensure that work is free from mistakes and errors.
If it is subsequently shown that mistakes or errors of judgment you have made fall short of the professional standards required, and your client has suffered financial loss or other damage as a result, you may be sued for negligence and ordered to pay a substantial sum in compensation.
Our business consultants professional indemnity insurance policies are designed to provide the protection you need against any such action.
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- Established since 1990, in providing cover such as business consultants professional indemnity insurance
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Business consultants professional indemnity insurance explained
If you claim specialist knowledge of a subject, based on particular skills, talents or qualifications, your clients may reasonably assume that any advice or recommendation you give them is backed up by that degree of professionalism.
Not only are they entitled to expect such a level of performance from you, but you have a duty to deliver it. If you are in breach of that duty – you act, or fail to act, in maintaining the standards of someone else in your profession – you may be held liable for any resulting loss or damage suffered by your client or clients. In that case, you may be ordered to pay damages by way of compensation.
The amount of compensation you may need to pay depends on the extent of the damage your mistakes have caused for your client. This in turn may depend on the extent and nature of your consultancy. But the damage – and what you need to pay by way of compensation – may be considerable.
It is in protecting you against such claims that business consultants professional indemnity insurance has such an important role to play.
Although you may have such cover, however, that does not mean that you are absolved from all responsibility for your actions, decisions, and recommendations as a consultant. If your work has been negligent or without any regard for your professional duty of care, your insurer may consider there to have been “contributory negligence” restricting the level of indemnity you can claim.
Don’t forget your public liability
In addition to your professional liability, it is important to remember that you also have a wider responsibility and a duty of care towards the public in general to ensure that your business actions – or inactions – cause no personal injury or damage to their property.
Members of the public may also include clients you meet in your offices or on their premises, visitors to your offices, suppliers and others.
If anyone suffers an injury or has their property damaged and you are held responsible for the incident, you may be ordered to pay substantial damages. When protecting yourself against such claims, you might want to bear in mind that public liability insurance typically offers a minimum of £1 million of cover.
… or your employers’ liability insurance
There is one further liability you may face if you are a business consultant who employs other people. In that case, you also have a special duty of care towards your employees. You need to take all reasonable steps to ensure that they are not injured at work or that they contract an illness or other medical condition as a result of their employment by you.
If they do, you may be held to have been a negligent employer and ordered to pay substantial compensation. To ensure that any such order may be affected, the law requires that you hold a minimum of £5 million indemnity cover.