What would happen if an important project for your consultancy suffered an unexpected failure that affected your client? The financial and legal consequences could be enormous, and prevention is often the best strategy. That’s why having insurance for your consultancy is the best way to protect both your work and your peace of mind.
What’s more, with the most important aspects of your work covered, you can focus on what really matters: providing a quality service and growing your business.
To find the best protection, you can count on Ambler: we are an insurance brokerage specialising in business insurance with tailor-made solutions. Today, we take an in-depth look at the essential insurance policies for consulting firms so that you can choose the right ones for you and strengthen the continuity of your business.
Typical risks for a consulting firm
The work of a consulting firm combines strategic advice, project management and, in many cases, technical implementation, which means it is exposed to various risks that it is important to be aware of.
Professional errors or negligence
In this business, an incorrect recommendation, a report with incorrect data or the omission of a key aspect can cause losses for the client. When this occurs, the claim usually includes:
- Financial damages: loss of profits, project cost overruns or the need to redo deliverables.
- Defence costs: lawyers, experts and legal fees.
- Out-of-court settlements: compensation to quickly resolve the dispute and avoid damage to reputation.
For a consultancy firm working to tight deadlines and with multidisciplinary teams, the risk of human error or contractual misunderstanding is real. In this regard, an appropriate insurance policy can absorb these costs and protect cash flow.
Civil liability
Beyond consulting, there are claims for personal injury or property damage that may occur during meetings, audits, or visits to client facilities. This also includes damages for defamation or misuse of content in presentations or reports. Although these scenarios may seem unlikely, claims for damages to third parties can reach high amounts.
Technological risks
A company of this type handles sensitive information: business strategies, databases, prototypes, codes and legal documentation. The most common threats are:
- Ransomware and malware that paralyse operations.
- Phishing and credential theft.
- Data leaks that trigger notifications to authorities and customers, with penalties and reputational damage.
Some consequences include business interruption, data protection fines and customer claims.
Other risks
- Property damage: fire, water damage, electrical faults, theft or accidental breakage of laptops, servers and furniture.
- Business interruption: temporary inability to work, resulting in loss of income and uncovered fixed costs.
- Transport and remote working: equipment that is moved between offices, co-working spaces and the homes of employees or collaborators.
What insurance should a consultant have?
The right combination depends on the profile of each consultancy firm and the contracts it signs with its clients:
Professional liability insurance (professional CL)
This is the cornerstone for a consultancy firm and for independent consultants. It covers errors and omissions in professional practice, including:
- Compensation to clients for financial losses arising from the service.
- Defence costs and bonds.
- Claims for failure to meet deadlines or deliverables, provided they arise from a covered cause.
Key points for fine-tuning the policy:
- Territorial scope and jurisdiction: if you have clients outside the UK, extend the scope.
- Retroactivity: protect past work that may give rise to a future claim.
- Sub-limits: verify specific amounts for defence, confidentiality, intellectual property or defamation.
General liability insurance
This insurance complements the previous one. It protects against bodily injury or property damage to third parties outside the professional service (e.g., an accident at the client’s offices). It is often required in contracts with large accounts or public administrations.
Cybersecurity insurance
Now more than ever, this insurance is essential and usually includes:
- 24/7 incident response, expert assessment and containment.
- System restoration and data recovery.
- Liability for data breaches and insurable administrative penalties.
- Crisis management: communication, notifications and public relations.
Adjust deductibles and limits to your data volume and technological dependence.
D&O Insurance
This is essential for protecting the personal assets of directors, executives and board members against claims from shareholders, employees, regulators or other third parties. It covers defence costs, bonds and compensation for acts, omissions, malpractice or alleged negligence related to their position.
How much does insurance cost for a consulting firm?
The price depends on turnover, number of employees, scope of activity, claims history and contracted limits. Technological exposure and the type of clients also have an influence (for example, the financial or pharmaceutical sector requires higher limits).
Some guidelines for optimising cost-coverage:
- Limits and sub-limits consistent with the average ticket size of your projects and the liability caps you accept in your contracts.
- Excesses that reduce premiums without leaving you exposed to frequent losses.
- Combined packages: by combining professional liability, general liability and cyber risk with the same insurer, you can obtain a more efficient premium.
- Risk management: internal policies (version control, QA, double validation, MDM, MFA) that the market values positively.
How does the size of my consulting firm affect the type of insurance I need?
Size determines processes, client portfolio and project complexity.
Micro and small consulting firms
- Professional liability insurance with limits commensurate with the size of the most demanding contract.
- Extensive retroactivity if there are recurring projects.
- Basic cyber risk with incident response, data recovery, and privacy coverage.
- Laptop equipment with comprehensive accidental damage and off-site coverage.
Medium-sized consulting firms
- Higher limits on professional liability and specific sub-limits for confidentiality, intellectual property, and defamation.
- General liability with cross-liability clauses.
- Cyber risk with extensions for interruption due to cloud provider failure, digital fraud and fraudulent transfers.
- Business interruption with sufficient compensation period for your sales and delivery cycle.
Large consultancies or those with an international presence
- Multinational programmes: adaptation to local jurisdictions and requirements.
- Excess layers to raise global limits.
- Advanced cyber risk with global response, coverage for insurable fines and robust crisis management.
- Tailored contractual clauses: inclusion of customers as additional insureds when required by framework agreements.
Can I insure specific projects rather than the entire company?
Yes, it is possible to take out project-specific cover when:
- A client requires a specific limit that is higher than the usual limit of your policy.
- It is an isolated project with a defined duration and unique risks.
- You need insurance certificates with exclusive conditions for that contractual relationship.
Practical considerations:
- Project-based coverage can coexist with your annual professional liability insurance and acts as excess or with special conditions.
- Check start and end dates, retroactivity (work prior to commencement) and the discovery period for subsequent claims.
- Assess the cyber risk associated with the project, especially if it involves integrating client systems or processing large volumes of personal data.
Smart insurance for your business
The first step in protecting your consulting firm is to identify real risks and put together a balanced insurance programme. To do this, professional advice from an insurance broker is key to understanding your operations and negotiating on your behalf, making it easier to align limits, excesses and clauses with the requirements of your contracts and clients. At Ambler, we analyse your activity, review your contracts and propose a tailor-made solution for your consulting firm. Shall we talk? Contact us and receive a clear proposal with coverage and limits tailored to your projects.
