What insurance does my consultancy need?

What insurance does my consultancy need?

Consultant asks:

I run a consulting business, just me in the business, as a limited company. What insurance do I need?

Acumenica Answers:

For a UK consultancy, the following types of business insurance might be relevant:

  1. Professional Indemnity Insurance (PII): This is a crucial insurance for consultants. It provides coverage in case a client claims that your advice or services led to financial loss, data breaches, or other professional mistakes. It helps cover legal costs and compensation if you're found liable. Your client(s) will probably require this as a contract stipulation.
  2. Public Liability Insurance: This insurance covers the cost of compensation if a third party (client, supplier, member of the public) is injured or their property is damaged due to your business activities. For example, if a client is injured while visiting your office.
  3. Employers' Liability Insurance: If you have employees, this insurance is typically mandatory. It covers claims from employees who are injured or become ill as a result of their work for your consultancy.
  4. Cyber Liability Insurance: In the digital age, data breaches and cyberattacks are a real risk. This insurance can help cover the costs of managing a data breach, including notifying affected parties and potential legal liabilities.
  5. Business Interruption Insurance: This insurance helps cover financial losses if your business operations are interrupted due to events like fire, flood, or other disasters. It can help you recover lost income and cover ongoing expenses during the recovery period.
  6. Property Insurance: If you have a physical office or own business equipment, property insurance can protect these assets against damage or loss caused by events like fire, theft, or vandalism.
  7. Directors' and Officers' Liability Insurance (D&O): If your consultancy has directors or officers, this insurance can protect them from personal liability in case they are sued for decisions made while carrying out their duties.
  8. Commercial Legal Expenses and/or Tax Enquiry Insurance: This insurance can cover legal costs if you need to pursue or defend legal action, such as contract disputes, or your business is subject to a tax or VAT enquiry by HMRC.