Liability insurance is an essential part of any consulting business, as the services you provide can result in litigation and third-party claims. Liability insurance protects your business from third-party claims arising out of a breach of contract, failure to deliver services as agreed, mistakes, misconduct, and negligence. This insurance is especially useful in the case of consultants who travel frequently. Here are a few reasons to have liability insurance for your management consulting business.
Cost of general liability insurance
Many consultants ask themselves: how much does it cost to get general liability insurance for management consulting? The cost depends on several factors, but generally runs about $1500 per year for a small business. Most consultants choose this type of insurance for their small operations. They can save hundreds of dollars a year by not purchasing this insurance, and it helps to keep the rate for workers’ compensation low. Another insurance type that a small consulting firm should consider purchasing is fidelity bonds, which cost on average $88 per month or $1,054 per year. This insurance is often requested by clients as a way of proving they are protected from dishonest employees.
Premium rates for this insurance vary widely depending on the size of the business. The larger the company is, the higher the premium will be. Since insurance companies typically classify businesses by size, those with one to five employees will be grouped with companies that have six to ten employees, and those with 20 or more employees will be placed in the largest group. As a result, the cost of general liability insurance for management consulting will increase as the business grows, and more businesses will need higher premiums to be protected.
Cost of professional liability insurance
The cost of professional liability insurance for management consulting businesses is determined by the risk factor of the firm. The higher the risk level, the more expensive the policy will be. An IT consultant’s programming error could cost $300,000, while a fitness trainer’s improper instruction could cost $50,000. However, a consulting firm can avoid such risks by developing a risk management plan. Below are some tips for obtaining the right amount of liability insurance for management consulting companies.
In addition to the basic liability insurance, management consultants can also purchase add-ons like professional negligence insurance and errors-and-omissions insurance. These add-ons cost additional money for the consultant and may be bundled with the basic insurance. Most small consulting firms pay between $50 and $100 per month for these add-ons. This amount is not large, and the cost of professional liability insurance for management consulting is not prohibitive.
Cost of fidelity bonds
Unlike errors and omissions insurance, fidelity bonds insurance is specifically for deceitful acts. It does not cover mistakes or oversights, which are common with this type of insurance. Because fidelity bonds are subtle in nature, it is vital to understand how these coverages work before deciding whether to purchase them. Below is a summary of the main features of fidelity bonds insurance. Here is a breakdown of the costs for both kinds.
A fidelity bond is a type of crime insurance that protects a business from specific acts of misconduct by its employees or subcontractors. In many states, fidelity bonds are free to purchase for the first six months. In addition, they are relatively inexpensive, costing between $100 and $300 a year. If you are a business owner with employees in a position of trust, fidelity bonds are an important consideration.
Cost of commercial auto insurance
For most management consulting firms, the cost of liability insurance is less than $1500 per year, with the typical premium amount being about $55 per month. Consultants may opt for monthly or annual payment plans, and can even pay their premiums in full to avoid finance charges. Liability insurance for consultants is vital for business protection, and can include a General Liability or Professional (E&O) Liability policy. These insurance policies typically cost between $650 and $1,200 per year.
When choosing insurance for your consulting business, you should look for the best price and coverage. Different insurers determine premiums based on the risk factor associated with your business, so it’s a good idea to shop around and compare quotes from several companies before settling on a single policy. Insurance marketplaces can help you reduce your cost by comparing quotes from different insurance providers. In addition, they can help you understand how to manage your coverage.