Business Consulting Firm Business Insurance
Getting insurance for your business consulting firm is essential.
Business consulting firms need to be protected against claims of things like contractual breach, professional negligence, and misrepresentation.
For example, an employee makes an error that results in a client’s financial loss, or an employee makes false claims about their professional credentials.
We’ll help you find the most personalized and affordable coverage for your unique business.
Recommended: Next Insurance is dedicated to matching small businesses with the right policy at the best price.
Best Insurance for a Business Consulting Firm
General liability insurance is — generally speaking — one of the most important insurance policies for business consulting firms.
Some of the risks general liability insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
General liability is an essential component of your business’s coverage. However, in order to achieve more comprehensive protection, many business consulting firms obtain some additional policies, such as:
- Professional liability insurance
- Commercial auto insurance
- Workers’ compensation insurance
- Commercial umbrella insurance
There are two primary options available to you when seeking coverage for your business, these are:
- Traditional brick-and-mortar insurers — Refers to providers with physical offices, storefronts, and insurance agents, such as Nationwide and Hiscox.
- Online insurers — Refers to providers with no physical presence that operate entirely online, such as Next and Tivly.
We suggest looking into online insurers for your coverage, as they offer high-quality insurance much more affordably than their traditional counterparts owing to their lower overheads.
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Cost of General Liability Insurance
On average, business consulting firms in America spend between $400 - $700 per year for $1 million in general liability coverage.
Compare the average cost of general liability insurance for a business consulting firm to other professional industries using the graph below.
Several factors will determine the price of your policy. These include your:
- Location
- Deductible
- Number of employees
- Per-occurrence limit
- General aggregate limit
You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy.
A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.
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Common Situations That General Liability Insurance May Cover for a Business Consulting Firm
Example 1: While visiting your office, a business owner trips on some broken pavement in your parking lot, sprains an ankle, and demands you pay for her medical care. General liability insurance would cover her medical treatment.
Example 2: A competitor files a lawsuit against you, claiming your business libeled her company. General liability insurance would pay for your legal defense and any required settlement.
Example 3: As you complete some work at a client’s place of business, you walk into his recording studio and accidentally knock over some expensive equipment. General liability insurance would cover the cost of replacing your client’s damaged property.
Other Types of Coverage Business Consulting Firms Need
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some of the most common types of coverage:
Professional Liability Insurance
While you strive to help your clients achieve the best possible results from their business ventures, there’s always a chance someone might claim your professional services caused them harm. If a client sues your business based on a negligence claim, professional liability insurance would cover your legal fees and any required settlement.
Commercial Auto Insurance
Any vehicle you use primarily for business requires commercial auto insurance to protect the vehicle, driver, and others on the road in the event of an accident. Be sure to select a policy that covers not only accident-related vehicle repair costs and medical treatment for anyone injured, but also sufficient protection for any business materials you carry in your vehicle.
Workers’ Compensation Insurance
If you have any employees, most states will require you to carry workers’ compensation insurance for both part-time and full-time workers. This coverage protects your employees if they become injured at work or fall ill after a work-related accident. It not only covers an employee’s medical bills and lost wages if they need time to recover, but also any disability or death benefits stemming from a work-related accident.
Commercial Umbrella Insurance
While your general liability insurance policy covers most claims, some accidents or lawsuits may be so catastrophic that they threaten to exhaust the limits of your primary coverage. Commercial umbrella insurance protects you from paying out-of-pocket for any legal fees and awarded damages that exceed your primary policy.
Additional Steps To Protect Your Business
Although it’s easy (and essential) to invest in business insurance, it shouldn’t be your only defense.
Here are several things you can do to better protect your business consulting firm:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up an LLC or corporation to protect your personal assets. (Visit our step-by-step guides to learn how to form an LLC or corporation in your state.)
- Stay up to date with business licensing.
- Maintain your corporate veil.
Business Consulting Firm Business Insurance FAQ
Yes, absolutely. You will need to first get a quote from an online business insurance provider like Next Insurance. Next allows you to then purchase a policy immediately and your coverage will be active within 48 hours.
A typical business owner’s policy includes general liability, business interruption, and commercial property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.
"Business insurance" is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.
Yes, it is a critical first step in successfully launching your firm. Given how prone to risks the industry is, ensuring your business consulting firm has sufficient business insurance is essential to protect your business from significant financial losses.
Also note that in certain cases, your firm may be required to hold certain insurance policies in order to operate legally (e.g., workers’ compensation and commercial auto insurance).
Not necessarily. Certain exceptions may be written directly into your business consulting firm insurance policy, and some perils may be entirely uninsurable.
Yes, an LLC is meant to create a legal barrier between your business and your personal assets and credit. If you haven’t formed an LLC yet, use our Form an LLC guide to get started.
An LLC doesn’t protect your business assets from lawsuits and liability– that’s where business insurance comes in. Business insurance helps protect your business from liability and risk.