Those in business as consultants provide a particular kind of service. Just as the name suggests, they are consulted on account of their specialist skills or knowledge. This is what the customer is buying, and the customer will expect that specialist skill or knowledge to be accurate, error-free and dependable. If it is not, and the customer or client suffers some financial loss or injury as a result of the consultant’s advice, the consultant can be held liable and therefore obliged to compensate the aggrieved customer. To protect him or herself against such claims, therefore, most people in business or self-employed as a professional consultant will arrange consultants’ insurance.

Many people are in business selling their expert skills or knowledge. These include architects, surveyors, solicitors, accountants, financial advisers, journalists, IT consultants, engineers and designers, to name but a few. Most of these will have considered the benefits and safeguards of protecting their business against customers’ claims of professional negligence or error with consultants’ insurance – or, as it is also commonly known, professional indemnity insurance. Indeed, many of the professional bodies that grant authorisation, registration or regulation will require their members to hold appropriate professional indemnity insurance before they can offer their services for sale. In addition, however, other consultants – such as public relations and advertising agencies, management consultants and designers, will also seek the benefits of consultants’ insurance and find that it inspires in their clients and customers a greater confidence in the professionalism of the consultants concerned.

Consultants’ insurance provides financial protection against claims that the services provided by the consultant have been made negligently or mistakenly and the customer has suffered loss or damage as a result.

The consultant’s business may be held liable if the customer or client can demonstrate a financial loss as a result of the consultancy services provided. This may be a claim that the work was negligent, or contained errors or omissions. It might also claim that the services provided infringed a third party’s intellectual property rights, or breached confidentiality or business confidences, and the customer has suffered a financial loss as a result. A further area of risk to the consultant – and one that even government agencies have shown themselves prone to – is the loss of data or documents. If the consultant’s customer suffers a financial loss as a result of such losses, then he or she is entitled to damages in compensation.

The appropriate level of consultants’ insurance will, of course, depend on the nature and size of the consultancy business. A specialist insurance adviser will be well placed to offer guidance and assistance in identifying the most suitable level and amount of consultants’ insurance for your particular business.

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