When Do You Need to Get Liability Coverage for Your Consultancy?
How opting for a business liability coverage enhances your reputation and attract clients.
As a business consultant, apart from honing your skills diligently, your focus should on making sure that you appear to be a competent, trustworthy ally that companies can rely on to get effective solutions for their needs.
A critical part of creating this reputation or brand image for yourself is also to convey the impression that you are fully geared to meet challenges, no matter how big or how complex they may be.
Now the big question many people aren’t asking is…
How exactly do you do that?
Our answer is…
You ensure, by various means, that your reputation in the marketplace is positive, you get feedback from happy customers through organic reviews, or you demonstrate your knowledge and capability by means of a blog where you share your ideas or industry updates.
There are many ways in which you can manage your brand image and reputation, and all of these helps immensely in convincing a potential client that you are just the consultant they have been looking for.
However, there is one thing that can make or break a deal for them.
How geared are you to meet a setback- that’s a question that most companies will actively be exploring when they look to hire you as a consultant?
There may be many setbacks that a consultant needs to deal with. You may have a shortage of personnel to deal with the client’s needs; you may be facing a shortage of time to get the job done and so on.
But the biggest and most debilitating challenge applicable to people in the insurance industry that you run the risk of facing is one that may come up after you start a job or even after you are done with it- the risk that a client is dissatisfied with your work or believes that your work caused some harm to their business.
The legal risk
No matter what kind of consultation business you run, the risk of facing a lawsuit is always one that you should be prepared to handle.
Remember that a client may file a lawsuit against you when they feel that you have not lived up to their expectations.
It is not necessary that they have to be right in thinking so. You may have done more than can be reasonably expected of you, and the client may still file a claim against you.
A situation where you are facing a legal claim is where liability insurance comes to the rescue- to cover your legal costs, which can be quite a huge sum.
Unfortunately, many consultants make the mistake of ignoring insurance when they start out.
Usually, this happens because the consultant is supremely confident about their abilities and they think that there will never be a situation where a client will be dissatisfied.
Again, remember that a client may be UNREASONABLY dissatisfied with your work too. That’s why you should cover your consulting business with the right kind of consultant liability insurance.
When Should You Think About Liability Insurance?
This is the question that many business consultants ask when they are advised to get liability insurance near them to cover their potential legal expenses.
Well, the answer is that it is best to get your coverage as soon as possible so that your business is truly protected.
Keep in mind that the insurance will only cover projects that you have taken up after the coverage comes into force.
If you took up a project before and it continued after you took your insurance cover, the project may still not be safeguarded by the insurance plan. There is no way for you to predict which client will file a claim against you, so there is no justification for postponing insurance either.
There is another good reason for you to think about insurance right way- it builds your credibility in the eyes of your future clients.
Let’s think of a scenario where you are making a proposal to a big client. There is a good chance that they will ask about your legal preparedness with the expectation that you will be fully geared to meet any contingencies.
No company will want to risk hiring a consultant whose business could fold for lack of funds if a former client files case against him/her.
Knowing that you have insurance to cover your bases tells the potential client that you are a competent business owner- a trait that is very critical for them.
Thinking about legal insurance right at the beginning is also a good thing for you in yet another way.
As an independent consultant, you do not have the luxury of unlimited finances that big companies have at their disposal. That means the amount of cash that you can afford to put into fighting legal battles is severely restricted.
However, you cannot let a claim go unchallenged because that would appear to be an admission of guilt.
Since you do not have huge financial resources, and you cannot afford to earmark too much cash from your business towards legal costs, the only option is to have a sound insurance plan covering you so that it absorbs your lawsuit expenses and keeps your business from bankruptcy.
Protecting your consultancy business with a liability insurance plan should be a priority item for you.
Postponing this can be a dangerous mistake to make; after all, legal expenses can turn out to be a severely draining expense and without insurance to cover these, there is a good chance your entire business capital may be absorbed in fighting your legal battles.;