Would you drive a car without having it insured? Or would you own a house without having insurance for the building?
It’s no different when you start your own consulting business. One of the things that new consultants will often overlook, is the necessary insurances that they have to have in place.
Depending on which country, region or state that you’re operating in, the rules or requirements may vary.
Typical insurances that you may require would include:
- Director and Officers Liability Insurance.
- Equipment Insurance.
- Travel Insurance.
- Public Liability Insurance.
- Professional Indemnity Insurance.
Professional Indemnity Insurance is probably the most important of all and the one that hopefully you will never need.
Professional Indemnity Insurance basically covers you for giving bad advice to the client and it protects you in case the client should decide to sue you.
But it’s a bit like having insurance to protect you against the lightning strike. Hopefully never in your consulting career will you need to actually use your professional Indemnity Insurance, but to not have it would be feel risky.
In over 1200 consulting assignments and consulting over a period of almost 20 years I’ve never had to use my Professional Indemnity Insurance. But I would never operate my consulting business without it.
Sadly, Professional Indemnity Insurance can be quite expensive. In my own businesses we generally carry $5 – $10 Million of cover and this can cost anything between $10 – $20, 000 a year. You may actually find, that your clients demand that you have Professional Indemnity Insurance, and may even ask to see the policy before hiring you.
So whilst some insurance may at the outset seem unnecessary and very expensive, don’t even think about embarking in your consulting career without putting the necessary protections in place.