Consulting Insurance

LLCs, startups, and sole proprietors all take on the risks of bigger businesses, only without the resources to recover quickly. And personal insurance policies won't provide protection for incidents related to your work. That's why consultants should invest in business insurance—even when it's not required.

You may need additional protection for:

• Your business property: Homeowner's insurance provides little to no protection for business property, which is why it's important to carry commercial property insurance or a business owner's policy, especially for computers, electronics, and other valuable equipment that your business depends on.
• Your vehicle: Beyond your commute, your personal auto policy won't cover accidents related to business use. If you drive to meet clients, you'll want to carry commercial auto insurance or hired and non-owned auto insurance (HNOA). Your state’s insurance requirements determine how much coverage you need.
• Client accidents: Every interaction with a client brings risk. If someone trips and suffers an injury in your office, or you accidentally drop a client's laptop, general liability insurance would help cover court costs, settlements, and similar expenses.
• Professional mistakes: Even the most careful consultant can be sued by a client looking to recoup their losses. Professional liability insurance covers legal costs when a dissatisfied client accuses you of a mistake, poor financial or legal advice, or other claims of negligence.
• Work-related injuries: A repetitive stress injury or ergonomic injury could result in hefty medical bills, which is why you need workers' compensation insurance. Personal health insurance won't cover injuries that are related to your job.

It's a good idea to be licensed and certified—and sometimes it's required. Here are a few instances where you might need a license or certification:

• Your local government requires a business license. States, counties, and cities often require you to get a business license to operate legally. You typically fill out an application, pay a fee, and then renew the license annually or after a set number of years.
• Your clients require it. Some clients will only work with licensed and certified consultants. For example, a school system might only hire an education consultant who's a Certified Educational Planner. These credentials show your business is reliable, especially when you're just starting out.
• You want to be the best in the business. Certifications are available for most types of consulting, from HR consulting to research and marketing. By continuing your education, you'll master skills that enable you to excel at your work, which will pay off for your business and your clients.

Depending on the specifics of your business, you may need additional protection. Consultants should also consider:

• Hired and non-owned auto insurance (HNOA): Consultants who drive their own car to meet clients should invest in this insurance, as your personal auto insurance won't cover business use. HNOA provides auto liability coverage for personal, leased, and rented vehicles used by your business.
• Business interruption insurance: If a fire or storm forces your business to close, this policy will pay for employee wages and other day-to-day expenses until you can reopen. It's sometimes included with your commercial property insurance or business owner's policy.
• Commercial umbrella insurance: An umbrella policy boosts the protection of your general liability, commercial auto, and employer's liability insurance, activating when the limit is reached on the underlying policy.
• Fidelity bonds: If an employee at your consulting firm steals from a client, a fidelity bond guarantees they will be reimbursed. Clients might require your business to carry a bond, especially when you work in finance.