5 Common Consultant Insurance Claims

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That’s why having a comprehensive consultant insurance policy is crucial. This type of policy typically includes professional liability insurance, which covers claims of negligence, errors, or omissions, and general liability insurance, which covers third-party claims of bodily injury or property damage.

If you don’t have an office and do not require commercial property insurance, it’s worthwhile to include business contents and portable electronics coverage to cover damages to your laptop and other electronic devices.

Unfortunately, mistakes, oversights, and other issues can irreparably harm your finances and reputation without insurance. Here are five real-life consultant claims and how business insurance helped a handful of our clients bounce back after facing unexpected problems:

1. Sued for Negligence

One of our HR consultant clients was sued by a former customer who alleged our client was professionally negligent by providing erroneous advice regarding their employment contracts. The HR consultant’s client suffered financial losses and sought to recoup those losses in court. 

Outcome: Our client’s insurance policy covered over $30,000 of their legal fees to defend themselves against the allegations. Their defence was successful, and their former customer was forced to repay our client’s legal costs.

2. Damage to Business Contents

A business consultant client of ours accidentally spilt water on their laptop, causing severe damage. The computer was beyond repair.

Outcome: Their business contents insurance covered over $2,000 to replace the waterlogged laptop. Business contents insurance covers various items like laptops, desktop computers, mobile phones, photocopiers, office furniture, and point-of-sale (POS) terminals.

Side note: Creating and maintaining an accurate inventory of your business’s contents is necessary if you need to file a claim.

3. Contract Dispute

One of our technology consultant clients was hired to complete a project, but completing it took longer than the agreed-upon deadline. Their customer alleged deficiencies in our client’s work and that they sustained additional losses due to the errors. They refused to pay the amount owed to our client. 

Our client’s insurance policy included coverage for unpaid fees, which can kick in if a customer refuses to pay for services rendered. This coverage can help cover the outstanding balance owed, in exchange for the claimant agreeing not to take legal action to pursue their additional losses. 

Outcome: Our client’s insurance policy covered over $4,500 of the outstanding balance owed to them, and their customer agreed not to sue.

4. Stolen Business Contents

Our client is an occupational health consultant. They travel to various locations to do assessments for their customers. 

While at a client’s location, all the work contents stored in their vehicle were broken into and stolen. 

Outcome: Our client had business contents coverage, which typically includes coverage for items like laptops, mobile phones, office furniture, and other business-related items. It paid over $20,000 to replace their stolen property.

5. Third-Party Lawsuit

A firm hired another of our HR consultant clients to investigate allegations of impropriety against one of its directors. Our client investigated and shared their findings, but they did not provide any recommendations. The director was fired and later sued our client and their former employer, alleging deficiencies in the investigation.

Outcome: Our client’s insurance policy covered over $19,000 in legal fees to defend themselves against the allegations. They successfully defended that the investigation they conducted was done correctly. Any impact on the plaintiff was a result of decisions by the company, not our client. The case against our client was dismissed.

How to Avoid Claims Against Your Consulting Services

Business insurance is the backbone of every consultant’s risk management strategy, but taking proactive measures to prevent damages or losses and claims against you helps keep your premium low and avoid disputes with your clients. Here are a few ways to do that:

• In your client contracts, set expectations and define the scope of work, deliverables, timelines, and responsibilities. Include information such as your payment terms and rates and terms for contract termination by either party and use clauses in the contract to limit your liability (we recommend that you have a lawyer draft and review your client contracts).

• With regular updates, keep your clients informed of your progress and the project’s status. Accurately document all communications, decisions, and work you’ve performed. Assess any possible risks associated with the project, develop strategies to minimize them, and set up an internal review process with your client to ensure your work is on target.

• Protect your client’s confidential information at all times, address any issues they raise promptly, and establish a continuous feedback loop to make any necessary changes as they arise.

How to Get Low-Cost Consultant Insurance Fast

Getting the low-cost consultant insurance you need to protect your finances and assets is quick and easy with Zensurance.

Fill out our online application for a free quote in less than five minutes.

Let us take the hassle of getting the coverage you need. Our knowledgeable brokers will shop our partner network of over 50 insurers to find an affordable policy that addresses your risks and customize it to your requirements. 

– Reviewed by Brandon Bowie, Team Lead, Professional Lines, Mohammad Samin, Senior Claims Advisor, and Reagan Elly, Senior Claims Advisor.