CONSULTANT LIABILITY INSURANCE



Consultants are usually independent contractors, which is why it is so extra vital for them to ensure they have taken out consultant liability insurance. Also known as Errors & Omissions insurance, these policies serve to protect consultants who could otherwise find their livelihood in serious jeopardy if they were to be hit by a law suit alleging they gave poor advice or encouraged bad decisions on the part of those they were consulting with.



Errors & Omissions insurance does not just serve consultants, it can also be used to protect people in many different forms of professional employment, from real estate brokers to software and web developers. Most independent contractors such as consultants will have already arranged other forms of insurance, such as health insurance, but professional liability insurance is just as essential and its importance simply cannot be underestimated. Independent contractors do not have the resources of big companies to defend against law suits - even ones that may be entirely frivolous and without a legitimate basis, the cost of defending against could still end up sending them bankrupt even if they end up winning the suit - so such insurance coverage is an absolute necessity. Indeed, in this day and age, it is becoming more and more common for companies who hire independent contractors such as consultants to insist that they have this particular form of insurance coverage before they will even consider doing business with them at all.

It is also important, however, for consultants taking out such liability insurance, to take careful note of the policy itself and its wording, as there are no set terms for such contracts and thus policies and clauses can vary from individual to individual. To give just one example, the exact meaning of the term "wrongful act" could be different from one policy to the next so you need to judge the policy carefully before betting their legal and financial future on it. Check if there are any specific circumstances that are actually excluded from coverage under the terms of the policy. Liability policies are usually granted on a "Claims Made" Basis, covering any law suits that are brought against the client during the period under which the policy is operating, even if the incident which has triggered the law suit occurred before said policy was put into effect - this is simply because it has become more and more common for law suits to be launched many years after the incident cited as the grounds for the suit actually occurred.