Last Updated: February 22, 2024, 9:45 am by TRUiC Team

Legal Consulting Firm Business Insurance

Getting insurance for your legal consulting business is essential.

Legal consulting businesses need to be protected against things like claims of professional negligence, misrepresentation, and breach of contract. 

For example, a client could file a lawsuit against your company, alleging that you provided negligent legal advice and caused financial injury.

We’ll help you find the most personalized and affordable coverage for your unique business. 

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Recommended: Next Insurance is dedicated to matching small businesses with the right policy at the best price.

Best Insurance for a Legal Consulting Firm

General liability insurance is — generally speaking — one of the most important insurance policies for legal consulting businesses. 

Some of the risks general liability insurance covers are:

  • Bodily injury
  • Property damage
  • Medical payments
  • Legal defense and judgment
  • Personal and advertising injury

However, since there are numerous risks faced by legal consulting businesses that general liability insurance doesn’t cover, consider the following additional policies for more protection:

  • Professional liability insurance to cover your costs if someone sues you for professional negligence
  • Workers’ compensation insurance to cover your employees if they are sick or hurt on the job
  • Data breach insurance for any cyberattacks you may face
  • Commercial auto insurance if your business uses any vehicles to travel to clients’ places of business.

The first step in choosing an insurance provider is to identify which of the following categories of business insurer is right for your legal consulting business:

  • Traditional brick-and-mortar insurers
  • Online insurers

For most small businesses, we usually recommend online insurers like Tivly and Next over traditional providers. Online insurers can offer the same coverage for a much lower cost because they have lower overhead, plus you can get coverage faster. 

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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.

Compare the average cost of general liability insurance for a legal 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.

Graph showing average price of general liability insurance prices per industry

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Discover the best coverage at the lowest rate in our affordable business insurance review.

Common Situations That General Liability Insurance May Cover for a Legal Consulting Firm

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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.

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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.

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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.

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 of the most common types of coverage:

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).

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 shouldn’t be your only defense.

Here are several things you can do to better protect your legal 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.

Legal 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 important to proactively protect your legal business with business insurance to guard against the many risks you can face. Otherwise, your business’s long-term financial health will be threatened.

Additionally, it is essential that you confirm whether companies in your state are required to carry specific business insurance policies (e.g., workers’ compensation or commercial auto insurance).

Not necessarily. Certain exceptions may be written directly into your legal 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.