Similar to other professions, consultants are liable to claims of errors and omissions from the work they do for their clients. They may be helping a company strategize to achieve business goals, but if the company becomes dissatisfied with the results, it could open a lawsuit of negligence against the consultant. These liabilities make Professional liability insurance (PLI) a wise investment.
When a lawsuit is filed against a consultant, there are many expenses involved. Not only does it require hiring a lawyer, but you may also lose money by having to miss work. You may also have to pay out a settlement or court costs, both of which could potentially cost hundreds of thousands of dollars. You may also have to pay for a brand management company to restore your reputation.
There are several reasons why a consultant needs PLI. Since the consultant is considered an expert, businesses and individuals will rely on the advice for decision-making. Any errors in judgment or mistakes could open the business up to a loss, which would then try to be recouped through a lawsuit against the consultant. Additionally, failing to respond to clients’ requests or accommodate needs could be considered neglect of duties or breach of contract.
Carrying PLI insurance helps reduce the financial costs associated with consultant risks. This coverage can give peace of mind as meetings with clients take place.