Consultants play major roles in the daily operations of a business. These professionals spend most of their time helping business owners make some very important decisions. When business owners need to determine the legitimacy of a new process, product, or system, they will oftentimes turn to the experts – business consultants.
Canada has thousands of business consultants, most of which are licensed, insured, and bonded. Canada’s laws require these professionals to be licensed and insured. Before a new business consultant can be licensed in Canada, he/she must be insured. Professional Liability Insurance (PLI), also known as Errors & Omissions (E&O) protects against financial loss linked to third-party claims and lawsuits.
No business consultant in Canada is free of risk exposures. Regardless of your licensure status, experience, firm size, or employee numbers, you face a broad range of risks daily. What are these exposure risks? First and foremost, the most common business consultant risk exposure is a negligence claim, which may or may not be legitimate.
Negligence claims are nearly always contributed to a mishap. Whether the mishap was accidental or intentional is for the investigator to decide. Once a negligence claim is filed against a business consultant, the damage has already begun.
Professional Liability Insurance – The Proper Solution
Have you ever wondered why business consultants have so many risk exposures? Well, it mainly has to do with their extensive responsibilities and important job duties. These professionals work with mom-and-pop businesses, nonprofit organizations, government entities, influential professionals, startups, corporations, and Limited Liability Companies (LLCs).
These professionals split their time between various business consultancy tasks. But, first, they must find which consultancy processes work best for them.
With so many job duties and professional responsibilities, business consultants oftentimes find themselves in some hairy situations. Fortunately for veteran business consultants, a high level of experience will ensure they come out unscathed every time. Unfortunately, this is not always the case, especially for newbie and short-time business consultants with minimal experience under their belts.
What options do these professionals have at their disposal? The two most effective options are surety bonds and professional liability insurance. Both of these protections are a necessity for Canada’s thousands of licensed business consults.
Professional Liability Insurance – Mitigate Financial Damage Caused By Third-Party Claims
As a business consultant, you must know the basics. With each completed business consultancy task, your experience and skills will gradually grow. The more experience, skills, professional contacts, and coverage you have, the easier it will become to stave off third-party claims.
Negligence claims are generally brought forward by a disgruntled client. No matter how hard you try to please everything, your effort will always be futile. Even veteran business consultants have found themselves between a rock and a hard place for one reason or another. These professionals did not quit. Instead, they continue pushing forward one step at a time.
The most devastating component of a third-party claim is a negative impact, which includes financial, emotional, and physical damages. There is no doubt, PLI can help minimize the devastation linked to third-party claims. By removing most or all of the financial burden from the business consultant, the claim’s negative impact will be lightened to some degree.
Why Is Business Consultancy So Risky
Hiring a business consultant is risky for companies, nonprofits, government entities, and professionals. The risks include a financial loss, a decreased profit margin, waste of precious time, and decreased productivity. This is only if the service is ineffective on some or all levels.
The business consultant is also at risk of financial loss, time, and reputation. There is a lot put into business consultancy services, especially when the client is nearing bankruptcy.
Business consultants are supposed to help companies by detecting and solving issues related to cash-flow. Unfortunately, not all business owners are business-savvy when it comes to saving a business from total failure. When a business reaches this low point, the owner will have no other option but to hire a licensed business consultant. The only other option would be to shutter the business forever, which is something owners try to avoid at all costs.
Another factor that makes the entire process risky is the business owner’s emotional state. If the business is nearly financial ruin, the business owner will exhibit desperation. Which business owner would not feel the same. If you knew all of your hard work, dedication, investment, blood, sweat, and tears were all for nothing, you would be a mixture of emotions. Business consultancy gives hope when there is none in many cases.
With this said, working with clients at their wit’s end can also be risky for business consultants. If everyone is not on board, the business consultant’s effort will be in vain. Whether the end result is positive or negative, the business consultant must be paid. Only on rare occasions will the business owner refuse to pay the business consultant. In these situations, the business owner may believe the consultant failed to develop and execute an effective solution. Everything will only go downhill from here, the business owner may decide to file a claim or even a lawsuit against the business consultant.
Is Professional Liability A Legal Or Professional Requirement?
It cannot be stressed enough, business consultancy is a high-risk profession and service. It may or may not be effective enough to stand up to its strong guarantee. If all goes well, everything will end well. If it fails, it will not end well for the client or business consultant.
Some Canadian laws require companies and professionals like business consultants to obtain and carry liability insurance coverage. If you are unsure about the legal requirements, you will need to contact the government entity that enforces professional insurance regulations.
As far as a professional requirement, business consultant liability insurance may be needed to secure a specific project. Business consultants are oftentimes left bidding on projects like contractors and other professionals. Just to get in on the bidding process, you must be insured with a reputable Canadian insurance company.
There also may be an occasion when you are asked to carry professional liability insurance by a project owner. Even if getting the job does not involve bidding, many project owners only consider fully insured business consultants. The reason for this is because business consultancy service is a risky investment.
If the project is government-owned, you will definitely be required to carry professional liability insurance. Government entities do whatever is necessary to protect their investments. One way they do this is through professional liability insurance.
Professional Liability Insurance Premiums – Do They Vary?
The rating system most often utilized by Canadian insurers includes various factors to ensure fairness across the industry. These factors may include value and type of business, claim history, business classification rate, and operation history. Canadian insurers try to ensure fairness across the industry. But, there are a few insurers that always seem to charge premiums higher than their competitors. These you will want to avoid at all costs.
The best way to get an idea of how much your professional liability premiums will run each month is to request a quote. ProfessionalsCoverage provides all Canadian business consultants professional liability quotes free of charge. As long as the information you provide is accurate, the quote will be as close to being accurate as well.
Canadian insurance companies want your service, some more than others. Request several professional liability insurance quotes for a quick premium and coverage comparison. Please note, the lowest quote is not always the best option. In fact, the lower than average quote could be a sign of things to come. As the old adage goes “if something seems too good to be true, it probably is not true.”
Call ProfessionalsCoverage To Request Your Free Business Consultant Insurance Quote
You can trust that ProfessionalsCoverage will provide you with an accurate quote within 24 to 48 hours of your initial request. These liability insurance professionals will guide you through the application process and point you in the right direction toward your best coverage options.
Obtaining professional E&O insurance does not need to be painful for you or the insurance company. Working with ProfessionalsCoverage will ensure smooth sailing through the entire process, starting with the application, ending with your approval notification.
Professional liability insurance is the best thing you could ever do for your business consultancy firm, employees, and family. The coverage could potentially round you more projects by making your firm look more professional and reputable.
Business Consultant Disability Insurance
You biggest asset in life is your earning ability. If you are unable to work, you will need to rely on either your savings or borrow money to sustain your lifestyle. When these unfortunate circumstances occur, dependents and spouses are also impacted financially and emotionally.
Disability insurance coverage will provide you a monthly income benefit, usually totaling 70% to 80% of your income, when you are unable to work for a period of time due to injury or illness.
Types of disability insurance
- Long-Term Disability Insurance (LTD)
- Short-Term Disability Insurance
- Key Person Disability Insurance
- Self Employed Disability Insurance
- Mortgage Disability Insurance
- Temporary Disability Insurance
- Supplemental Disability Insurance
Need coverage in effect? Compare the market!
FAQ before purchasing business consultant Liability Insurance
- How much business consultant professional liability insurance do I need?
- How do I get a business consultant insurance policy?
- What does business consultant professional liability insurance cover?
- What is the difference between claims made & occurrence form of coverage?
- When will I need to be insured as a business consultant?
- What other professions need this type of insurance?
Other useful posts you should also read
- Canadian insurance companies that provide professional liability insurance for business consultants
- How does the claims process work if I get sued because of my business consulting services?
- What is the cost of business consultants liability insurance?
- How do I apply for a business consultant professional liability insurance policy?
- How do I qualify for coverage as a business consultant?
- What is the purpose of getting insured as a business consultant?
- How long will it take to get an insurance quote for my consulting business?