Professional Indemnity for Management Consultants

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Regardless of the industry, all consultants face the risk of being sued due to the personalized service provided. Consequently, professional indemnity insurance is essential for many industries and vital for those who work in management consulting.

Once you have professional indemnity insurance, you are covered for legal and compensation costs that result from clients bringing a suit against you. Whether they suffer a loss due to the work you have performed, or any other reason, whenever it is proven to be your responsibility, you will be covered. Also known as E&O insurance or professional liability, essentially, this form of insurance covers all work mistakes.

Do Management Consultants Need Insurance?

Insurance management consultants need insurance. The average cost of being sued amounts up to $91,000. Unless you are prepared to pay such costs unnecessarily, you need insurance.

Even if you are good at what you do, there is always the chance that a situation with a client can go south. You might avoid making mistakes, and even so, still be blamed and be liable.

Insurance helps to protect you for claims against your business. It can potentially save your business. Rather than wait until you need it, purchasing insurance ahead of time helps you to prepare for the worst.

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What are the Risks a Management Consultant Could Face?

As a management consultant, you work closely with clients on serious topics. Typically, you will know the in’s and out’s of your clients’ companies, and one mistake can make a considerable impact. Due to this proximity, you put yourself in a higher risk situation than other professions.

Many times, customers might get angry and file a lawsuit even if it is not warranted. Without management consultant insurance, you will not be covered for any of these scenarios. Regardless of what results from a lawsuit, even if you end up winning, you will still have to put money and time into defending yourself. Professional indemnity helps to prevent those risks and losses.

Some situations might not seem like a reason to be sued, but they can turn into a very messy situation. These include:

Breaching a nondisclosure agreement Missing deadlines Misrepresentation of facts Improper documentation Slander or defamation lawsuits Accidental data breach Loss of data Violation of good faith Improper procedures Being negligent regarding client data


Being accused of a work mistake can be extremely costly. If a client claims your projections were incorrect, then this could cause you financial damage in the long run. Professional indemnity covers all your legal fees, whether it is or it isn’t your fault.

Undelivered services

Frequently you might give a specific deadline in which you believe you can deliver a project but then cannot meet it. If missing this deadline severely affects your client, they might take you to court for their losses. Professional indemnity insurance helps to pay for their loss as well as yours due to the lawsuit.


When you promise a client a certain standard of work, if you do not meet it, you can be accused of negligence. Management consultant professional indemnity insurance helps to pay for legal expenses such as court fees and the cost of hiring an attorney.

Violation of Good Faith

Your client trusts you and, even if by accident, you perform an act of noncooperation, you are violating their good faith. Such a violation might include withholding or sharing private information. Despite always attempting to avoid this, it can happen, and with professional indemnity insurance, you will be covered.

Professional Indemnity for Management Consultants

Management consultant professional indemnity insurance pays for legal defense, costs of settlements, court costs, or any other expenses that occur due to negligence.

Professional Indemnity vs. General Liability Insurance

General liability covers accidents that involve your clients and is often required to sign contracts. The reason for this is that clients are looking to reduce their risk by knowing that you hold insurance that covers your mistakes. General liability is much less specific than professional liability insurance. The problem with this form of insurance is that it will not cover anything regarding criminal offenses, theft of client property, or other serious situations.

What Other Insurance Types Do Management Consultants Need?

Aside from management consultant professional indemnity insurance, you should hold a few other forms of insurance.

Business Insurance

This insurance is essential as it covers the cost to repair your property if something occurs, such as a fire, storm, or even vandalism. Business insurance covers you for the damages. This insurance can also provide coverage if you are forced to close your business, such as in a pandemic.

Public Liability Insurance

Different from professional indemnity, public liability protects you if a third-party is injured on your property. This insurance also protects you if a third party’s property is damaged at your business. Whether this is their car being keyed, or something else, you will be covered.

Management Liability Insurance

Although you may attempt to vet everyone who works for you, management liability insurance covers you in case of mistakes made by employees. Specifically, this insurance covers you for losses created by an employed director or officer and associated legal costs.

Cyber Insurance

This insurance covers you in case of cyberattacks. Cyber-attacks lead to both data breaches and losses of client information. In the modern age, cyber insurance covers all your bases regarding data recovery, legal costs, and computer expert services.

Workers Compensation Insurance

Although not every management consultant needs this policy, if you have any employees, you will need it. Almost every state requires employees to hold this policy by law. Worker’s compensation will cover medical fees and lost wages due to work injuries.

The Cost of Management Consultant Professional Indemnity Insurance

The cost of your professional indemnity policy will vary across providers. Despite this, there is an average premium range for specified claim amounts and aggregates. Your aggregate limit is the amount you will be reimbursed for losses within a specific time. Typically, your aggregate limit is around one year.

CoverageAnnual Premium
$500,000 per claim and aggregate$500-$700 annually
$1 million per claim and aggregate$650-$900 annually
$1 million per claim, $2 million per aggregate$875 - $1,200 annually
$2 million per claim and aggregate$900 - $1,400 annually

Your deductible is always between 0 to 10% of the limit of insurance that you carry.

The Bottom Line

Being a management consultant is somewhat of a high-risk profession. Whether your clients expect a level of knowledge from you or are waiting for you to deliver, you hold a lot of power in your hands. Regardless of whether you make a mistake, or your clients believe you have, they can sue you. For this reason, you should always carry management consultant professional indemnity insurance.

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