Posted by : Dan Levenson Friday, June 27, 2014
The management consultancy industry is a tight battlefield in the business world. Some companies may have consultants like you on their payroll to help make the organization a better place for everyone. However, even the best consultants out there can commit some errors with serious consequences to follow. As such, management consultants must have themselves covered by an errors and omissions (E&O) business insurance policy.
Also known as professional liabilities insurance, E&O policies are designed to cover your legal fees in case you are sued for mistakes you made on the job that affected your clients. These will include misrepresenting facts, improper documentation, deleting vital information, or violating a non-disclosure agreement (through acts such as leaking insider material, for example). The policy will also cover any compensation to the clients if the case worked in their favor. Take note that E&Os are different from general liability insurance, which only covers bodily harm or property damage if an incident involving you or your employees happened at your client’s office.
Some consultants may argue the need for E&O coverage if your client is happy with your work. Still, like with other insurance types like homeowners insurance, some events may still happen that are just out of your control. You will need E&O policies to keep your business protected.