#1. “I always take extra precautions; this won’t happen to me.”
You can dot all the I’s and cross all the t’s, but perceived bad advice or loss as a result of your actions is all it takes for someone to sue you, even if it’s incorrect. Regardless of whether or not the allegations are true, the legal expenses sustained throughout the process of proving your innocence can cause significant damage.
#2. “I work from home, and I don’t need liability insurance.”
Most homeowner’s insurance policies don’t cover business-related damages that occur at home, and even if it does, chances are it won’t cover claims that arise when you’re visiting a client on-site or traveling for work. A comprehensive insurance policy will protect you wherever you go.
#3. “My contract is airtight; I don’t need Consultant Insurance.”
A contract is an agreement between you and your client that outlines the specific terms of a project. It also describes whether or not lawsuits are an option. If you breach your contract, even accidentally (e.g., a missed deadline), your agreement could be voided, making a lawsuit an available option.
#4. “I only provide advice, so I don’t need E&O coverage.”
When you’re a consultant, you can be held liable for almost any negative impact that your services have on a business. For example, you’re an event consultant for a high-profile gala, and you accidentally send invitations to the wrong set of contacts (an error) or only half of the list (an omission), resulting in a negative response.
Including E&O in your policy ensures you have coverage for the legal services required to defend yourself against claims of negligence, even if those claims are baseless. This coverage is essential since the legal defense costs (including lawyer’s fees) are often the most expensive part of an E&O lawsuit.
Lawsuits are complicated, and they can be both emotionally and financially stressful. When it comes to insurance for consultants, it’s always better to be safe than sorry.