The importance of Professional Indemnity Insurance for management consultants

A report from the Management Consultancies Association (MCA) the representative body for management consultancies in the UK has highlighted the importance of taking action to protect your business during difficult trading times.

As a sign of the times, 76 per cent of clients are now transferring project risks to their consultants state the MCA. Their research suggests that risks faced when delivering consulting and outsourcing projects over the past two years have increased, placing the financial security and company reputations of consultancies in danger. With difficult business conditions also being experienced across the pond, it follows that business consultants operating far and wide should be prepared.

While some businesses in the UK are required by law to protect themselves from a level of risk by taking out Professional Indemnity Insurance (PII) and meet minimum levels of cover, this is not always the case. PII protects management consultants against potential claims of neglect, error or omission from clients. It also covers the cost of making a legal defence and paying compensation for such claims. Through PII management consultants can cover their business against errors – alleged or actual, which have occurred due to negligence, breach of duty or civil liability; however it does not cover deliberate errors.

So, in order to protect your business from the potential impact of rising risks, consider your insurance options and take time to speak to experts and find tailored indemnity & liability insurance for management consultants to meet your needs. Established specialists such as Markel will be happy to guide you through your options and help you decide on your level of protection. Be aware however; under-insuring in this area in the current climate could potentially mean losing the financial security of your business.

Alex is the founder and editor of SmallBizPod, the UK's first podcast dedicated to small business, start-ups and entrepreneurship. Alex writes about topical small business issues, entrepreneurs and anything else that catches his eye here on the small business blog. http://www.smallbizpod.co.uk