Business Insurance is designed to protect a business owner's financial assets and is an essential investment for a legal consulting firm.
This article will cover the main insurance coverage for legal consulting firmes, general liability insurance, and suggest other policies that are suitable for this business.
Recommended: Use our dedicated small business insurance provider, Next Insurance, to get a quote now!
General Liability Insurance For Legal Consulting Firms
All businesses, regardless of industry, face risks that should be covered by insurance. The most common and comprehensive type of policy business owners invest in is general liability insurance.
Some of the risks general liability insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
While businesses aren't legally required to carry general liability insurance, operating without it is extremely risky. If your business is sued, you could end up facing fees totaling hundreds of thousands of dollars (or more). Having a sufficient general liability insurance policy in place to help compensate for these damages is the only way to prevent this type of event from devastating your business.
Learn more about the risks covered by general liability insurance.
Check out our review of the Best Small Insurance Companies.
COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE MAY COVER FOR A LEGAL CONSULTING FIRM
Example 1: Your new billboard features a photo protected by copyright and the owner has named you in a lawsuit. General liability insurance should cover your legal representation and awarded damages in the copyright infringement lawsuit.
Example 2: A client brings her son to a meeting, where he breaks a glass vase and cuts himself. Your general liability policy should cover his medical bills.
Example 3: A delivery driver slips on the ice in your parking lot and is suing for the cost of his medical bills and lost time out of work. General liability insurance should cover his damages and your legal representation.
Example 4: You have applied for a loan in hopes of moving to a larger office. The loan officer requires evidence of liability insurance as part of the terms of the loan. Your general liability policy should meet these requirements.
Of course, this is not an exhaustive list of perils a general liability insurance policy will cover, and some conditions may result in a particular peril not being covered. It's always best to talk to your agent in-depth about the specifics of your policy to avoid blind spots in coverage.
Learn more about the risks covered by general liability insurance.
Cost Of General Liability Insurance
On average, legal consulting firms in America spend between $400 - $700 per year for $1 million in general liability coverage.
Check out the chart below for a snapshot of average general liability insurance expenditure across a variety of industries:
Several factors will determine the price of your policy. These include your:
- 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.
Other Types Of Coverage Legal 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 other types of insurance all legal consulting firms should obtain:
Professional Liability Insurance
Your clients rely on your team’s professional expertise. If they feel their needs are not met, either from professional negligence or errors and omissions, professional liability insurance would provide coverage for a related lawsuit. The policy, also known as Errors and Omissions (E & O) insurance, covers expenses and awarded damages, up to the limits of your policy.
Commercial Property Insurance
If your legal consulting firm is in an owned building, this should be part of your insurance portfolio. In addition to insuring the building, it covers business-owned assets kept on-premises.
Insurance companies can also write this policy for renters to cover only specific building sections. Business owners should discuss their business model and needs with an insurance professional to ensure optimal coverage.
You can purchase commercial property insurance as part of a business owner’s policy (BOP).
Types Of Coverage Some Legal Consulting Firms May Need
In addition to the policies outlined above, there are a few other types of coverage your legal consulting firm may require depending on certain aspects of your operations. Some of these might not apply to you, so be sure to ask your agent which policies are right for your business.
Data Breach Insurance
As a legal consultant, your firm stores a significant amount of personal and important information. This can make you vulnerable to online hackers. Since general liability policies exclude cyber attacks, data breach insurance can help fill any gaps and keep your information safe.
You can purchase this coverage, also known as cyber attack insurance, as an endorsement or a separate policy.
Workers Compensation Insurance
The state requires all business owners to carry workers compensation insurance on their employees. It provides coverage for on-the-job illness and injury, including payment for medical bills and lost wages. If a claim results in a lawsuit, workers compensation would also pay for the business owner’s legal representation and awarded damages.
Workers compensation insurance is often purchased as a standalone policy.
Commercial Umbrella Liability Insurance
As a legal consulting firm, you are no stranger to today’s litigious society. If a lawsuit brought against your firm becomes expensive and lengthy, you could exhaust your underlying general liability limits. An umbrella policy takes over where general liability insurance leaves off and keeps your personal and professional assets protected.
Additional Steps To Protect Your Business
Although it’s easy (and essential) to invest in business insurance, it should not be your frontline defense. Yes, insurance will compensate for your business’ financial losses after an incident occurs, but it’s much better to avoid losses altogether.
With this in mind, here are several things you can do to better protect your business:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up a limited liability company (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.
- Streamline your business’ internal processes. This will remove unnecessary variables from common tasks and create a safe, consistent environment for conducting business.
- If your business is an LLC, look into LLC Insurance.
Steps After Getting Business Insurance
Depending on where you are in your business building process, here are some other actions you may need to take before getting started:
- If you’re just starting, finding the best name for your business is a great first step. Check out TRUiC’s Business Name Generator.
- After finding the perfect name, get a logo with our Logo Generator.
- Every business needs a website. Using a website builder like the GoDaddy Website Builder or Wix makes building a website simple and fast! Check out our review of the Best Website Builder.
Business Insurance is the Best Way to Protect Your Business
If you're starting a new business, then you need business insurance. It's as simple as that. The protection offered by an LLC will protect your personal assets, but your business's assets are still open to liability in the case of a lawsuit or other loss.
Be sure that everything you've built is safe by getting business insurance.
Frequently Asked Questions
What is included in a business owner’s policy?
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.
What is the difference between business insurance and general liability insurance?
"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.
Do I need insurance before I start a business?
You should invest in insurance coverage for your business before your first interaction with a customer. Although the cost of insurance may seem high for a brand new business, it’s best to be proactive when it comes to protecting your assets. After all, you can’t buy insurance to cover a loss that has already occurred.
Will insurance protect my business from everything?
Not necessarily. Certain exceptions may be written directly into your policy, and some perils may be entirely uninsurable. Be sure to discuss the scope of your policy in-depth with your agent to avoid being blindsided by holes in your coverage.