Do I Really Need Liability Insurance?

Answer:          Consultants see liability insurance as complex, time-consuming, and expensive, so we tend to avoid the issue until faced with a contract that requires it. Ironically, our clients force us to think about our own risk as well as theirs.

Professional Liability Insurance and Errors and Omissions (E&O) Insurance are the same thing. It protects you against being sued for losses a client may suffer due to an error, omission or negligent act arising out of the services or advice provided by you or your firm either now or in the future.

There are two types:

a)        Claims made: protects only against claims occurring during the policy period (the less expensive option);

b)         Occurrence: protects against claims based on the policy period even if made years after the negligence occurred or the policy has expired (more expensive but more comprehensive).

What to do about it? Buy it!


  • Find a business or professional group insurance plan.
  • Get an insurance broker to search for you.
  • Lower the cost by using that broker for all your insurance needs
  • Select a higher deductible.
  • Practice due diligence to decrease potential risks.
  • Ensure that your business processes run efficiently.
  • Communicate effectively and often with your client.


Originally published in the Independent Consulting TIG Newsletter, Volume 3, Issue 2. April 2012.

For more information see:

Barrington, G. V. (2012). Consulting Start-up & Management: A Guide for Evaluators & Applied Researchers. Los Angeles: SAGE.

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