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Inside Look at Management Consultant E&O Insurance


Inside Look at Management Consultant E&O InsuranceProtect Your Firm with Management Consultant Errors & Omissions Insurance Coverage

As a management consultant firm, people rely on your area of expertise to deliver results. You go through an entire process to determine your prospective client’s needs and expectations and how you can address these needs. In many cases, there is an RFP that allows you to respond with a creative solution to a business problem or issue. In your response, you will be asked to provide, among many other things, a full list of your firm’s consulting services and the scope of those services, personnel assigned to the client, your Best Practices, the process for providing performance measurement reports, timelines for completed project, fee proposal, etc. You make every effort to have the details squared away prior and during the project. But things can still go wrong and you may found yourself in a lawsuit claiming your firm missed the deadline for completing the work, misrepresented certain facts, or made an error that caused financial loss to the client.

A Professional Liability or Errors and Omissions (E&O) insurance policy is designed to provide management consultants with the coverage you need should you find yourself in a suit involving the performance of your work. E&O insurance will cover you if one of your clients should allege that he or she suffered a financial loss due to an oversight or an error you or one of your employees makes on the job. You will have coverage for your legal defense costs and financial compensation for your client if you’re found liable for the damages. Typical allegations of errors and omissions made against management consultants include: improper documentation, improper fact verification, missed deadlines, misrepresentation of facts, breach of non-disclosure, loss of data and improper procedures or negligent handling of data, failure to prevent electronic theft of records and confidential information, employee theft and sale of client’s trade secrets, deliberate dissemination of false information, and violations of state and federal law, such as violation of right to privacy.

Typically, most E&O policies are written on a claims-made basis, meaning that the policy must be active when an allege incident occurs and the policy must still be in force when a claim is filed. You can also keep your business protected during times of transition with “tail” coverage or “prior acts” coverage. Tail coverage allows you to report claims after your policy has been terminated. For example, if a past client files a lawsuit against your business after you’ve terminated your previous policy, prior acts coverage protects you retroactively for those events that may have already taken place but haven’t been reported.

It’s also important to note that a General Liability policy does not cover professional liability-related claims. That’s why it’s critical to ensure that you are properly insured for allegations of errors and omissions with separate coverage that is customized for your management consultancy firm.

The E&O professionals at Axis Insurance Services can help you secure the right professional liability coverage for you and your firm at a competitive price. We have the breadth and depth of experience in professional liability insurance to customize a policy for your management consulting firm. Please give us a call at (877) 787-5258.

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Blogged on: September 12, 2014 by Mike Smith
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