Consultants help their clients in many measurable ways. However, consulting can be a risky business. Those who enter the profession can find themselves in rather precarious situations. Consultants must protect themselves from potential hazards. The best way to do that is getting professional liability insurance. There are several reasons why consultants in New Jersey should consider carrying a professional liability insurance policy.
1. Errors and omissions
The main function of professional liability insurance is to protect the holder from any errors or omissions that were made on the job. Professional liability insurance can protect a consultant against the following types of problems that may occur:
– Documentation errors
– Verification errors
– Failure to protect a clients data or property
– Misrepresentation of clients
– Violating laws
– Improper behavior, such as theft or breach of contract
– Poor advice
– Exposing proprietary or confidential information
2. Protection from risk
Consultants are constantly at risk due to the type of services they offer. For example, some consultants can be accused of defamation of character or slander. Unfortunately, consultants are even at risk of being sued for smaller errors such as those that can be made entering data. Consultants who have professional liability insurance are covered from these risks. They will not have to worry about having to pay for the client’s losses or court fees out their own pockets.
3. Greater risk of lawsuits
Consultants who do not have professional liability insurance put themselves at a greater risk of being sued. If a client learns that a consultant does not have this type of insurance, he or she can easily manipulate or take advantage of the consultant since there is no protection in place. If a client puts a consultant in this type of position, the best course of action might be for the consultant to bring a lawsuit against the client. This would be quite difficult without the financial assistance of professional liability insurance. Ultimately, a consultant could lose the business as well as personal assets such as a home or financial assets.
4. Risk of losing business
Many clients and other businesses require a consultant to have professional liability insurance in order to do business with them. Therefore, consultants who do not acquire the insurance can lose out on these clients, which results in the loss of business, and, of course, money. Clients require consultants to have professional liability insurance to ensure any mistakes that are made by the consultant will be covered. Customers do not want to be forced to pay out money to fix the issue. Therefore, they will require proof of insurance before they will be willing to work with a consultant. Any consultant who is unable to produce this documentation will be out of luck and out of a job.
Consultants should also note that most clients will not want to wait to see proof of insurance. If it cannot be produced when it is asked for, potential clients will simply move on to a different consultant who is able to do so. This can make it difficult to attract new business. Additionally, if current clients gain knowledge of a consultant’s inability to obtain new clients due to lack of insurance, they may decide to sever the business relationship.
5. Financial protection
Professional liability insurance offers a significant amount of financial protection for a consultant. A consultant who must pay a judgment needs to have a way to pay for it. Professional liability insurance will provide the necessary money for this purpose. Consultants without this type of insurance must find a different way to find the money. If they cannot, they are subject to having personal assets seized, which may include their home and vehicles.
A consultant’s job is dependent on image. It is important to retain current clients as well as attract new ones. Being adequately insured with professional liability insurance is a must for any consultant who wants to put forth a professional image. Although this type of insurance is not required, many current and potential clients will ask to see proof of it. Being able to produce proof of professional liability insurance will let the clients know he or she is a serious professional a quality most potential clients look for when hiring a consultant.
New Jersey consultants who are focused on having a solid reputation carry professional liability insurance. Having professional liability insurance protects a consultant from professional risk and financial ruin in the event of a lawsuit. Plus the mere fact of having it can bolster a consultant’s image and client list.
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