Management Consultants policy cover

There are a number of Institutes and Professional bodies who include Management Consultants within their ranks, these include (but are not limited to) Institute of Interim Managers, Institute of Business Advisors, Chartered Management Institute, Business Continuity Institute, Institute of Leadership and Management.

There are other associations such as the Link Management group who provide valuable resources and networking facilities. None of the professional bodies lay down a requirement for minimum levels of Professional Indemnity cover.

There are many different types of management consultant, from those that cover department heads for a sickness or paternity absence to those who are full interims covering FD and CEO roles. The risk and level of cover that is required varies as greatly as the different roles and whilst there are some very cheap policies available on the market it needs to be borne in mind that the scope of cover provided by such cheap professional indemnity policies will be very limited and may not respond in the event of a claim.

Features of cover that you should look out for should start on the basis of cover – is it for errors and omissions only or is it on a full negligence basis including breach of duty of care? Many of the cheap policies do not include Mitigation of Loss cover – this is the reasonable costs and expenses incurred to prevent or reduce the cost of a potential loss and allows you to take steps to minimise the damage or loss that your customer experiences as a result of a mistake that you have made rather than waiting for them to make a claim against you for damages. This cover can help you retain customers after you have made a mistake and build relationships rather than losing them altogether.

You should check whether your policy cover includes defence costs within the limit of cover or if these are provided in addition to the sum insured. Often Defence costs will be the most expensive part of any claim that you make and the best polices will provide these in addition to the policy limit without excess or cap. Most policies will include cover for costs incurred for representation at tribunals and hearings.

Cover for Infringement of intellectual property rights is a useful extension, particularly if you are providing training courses. Another useful extension is cover for Loss of Documents – this would include costs incurred replacing or restoring documents.

Most management consultants will find cover for Defamation ie innocent libel and slander to be essential, but especially those who specialise in change management and HR.

If your business employs others or if you use subcontractors to carry out some of your work then cover for dishonesty by a director, employee or self-employed person contracted to you and under your supervision will be essential.