You sell advice. That is what you need insuring.
If a client says your work cost them money, the argument is about your judgement, not your property. General liability does not touch that, and most consultants find out when a client contract demands cover they do not have.
Build the firm file Talk to a broker What you needErrors and omissions, general liability and cyber for advisory firms
Consultants, IT, marketing, bookkeepers, recruiters and coaches
The client contract that asked you for insurance
What insurance does a consultant need?
Professional liability, also called errors and omissions, is the main one. It responds when a client claims your advice, your work or your failure to deliver caused them a financial loss, and it pays the cost of defending you even when you did nothing wrong. Most consultants also carry general liability, because client contracts and office leases demand it, and cyber cover if they hold client data.
General liability will not respond to a client saying your advice cost them money. Without professional liability, the defence and any settlement are paid by you personally or by the business you built. The Insurance Bureau of Canada draws the line at being paid for judgement: “If you’re paid to provide professional services or advice, you may need professional liability” cover. That is the whole test. Not your title, not your industry. Whether someone pays for your advice. Read IBC on types of business insurance (opens in a new tab).
Corporate and government contracts specify these, at stated limits, before you can start work.
Six covers, doing six different jobs.
Professional liability (E&O)
Claims that your advice or work caused a financial loss. Includes defence costs, which usually arrive long before any finding of fault.
Technology errors & omissions
For IT firms and developers, where a failure or an outage causes a client a loss.
Contents and equipment
Laptops, cameras, tools of the trade, often at a client’s site or in a car.
Three things in your policy worth checking tonight.
These decide whether a professional liability policy does what you think it does.
The retroactive date
Work done before it is not covered. Switching insurers can reset it and quietly leave past projects uninsured.
Claims-made, not occurrence
Professional liability usually covers claims made while the policy is live. Let it lapse and past work stops being covered.
Whether defence erodes the limit
If legal costs come out of your limit rather than sitting on top, a long dispute eats the money meant to settle it.
Most consultants buy this because a contract made them.
Which means the contract, not the brochure, sets what you need.
Client agreements specify the limit, sometimes require the client to be named, and occasionally demand wording your standard policy does not include. Buying a policy first and reading the contract afterwards is how people end up paying twice.
Send us the client agreement before you buy anything. It takes minutes to read, it costs nothing, and it is the difference between cover that satisfies the contract and cover that does not.
Worth reading next: what counts as a professional for E&O. Also worth reading: when a client complaint becomes something you have to report. And when a client’s data goes missing, which of your two policies actually answers.
Worth reading next: whether defence costs come out of your limit.
How this can play out.
A software project overruns and the client claims the lost revenue. Your general liability policy does not respond, because nothing was damaged and nobody was hurt. Professional liability is the policy that answers.
Anyone paid for judgement rather than product.
Architects, engineers and design professionals have their own program, see architects & engineers. Accounting and law firms should start with cyber for professional firms.
The clauses consultants meet at claim time.
Errors and omissions cover leans on definitions: what counts as your services, when the claim happened, and who you promised what.
Work outside the defined services
The policy covers the services described in it. Consulting that drifted into implementation, or coaching that became counselling, can drift right out of the definition.
The claims-made clock
The policy answers for claims made while it is in force. Let it lapse between contracts and a complaint about last year finds no policy home.
Subcontracted work under your name
A subcontractor’s mistake delivered under your letterhead is your claim. The policy should know they exist, and their own cover should too.
Promises made in the proposal
Guarantees of outcomes or savings written into a pitch can be read as warranties. Policies answer for negligence, not for promises the work could never keep.
The definition of your services is the whole policy. Check that it reads like what you actually sell this year.
What consultants ask us.
What is the difference between general liability and professional liability?
General liability covers injury and property damage. Professional liability covers financial loss caused by your advice or work. A client suing over a failed project is a professional liability claim, and general liability will not respond to it.
My client contract demands $2 million E&O. Is that normal?
Yes. Two and five million are the common figures, with larger amounts on government and enterprise work. Send us the clause and we will match it exactly.
I am a sole consultant. Do I really need this?
If you give advice anyone relies on, yes. Defence costs alone can be substantial, and they start whether or not the claim has merit.
What happens if I let my policy lapse?
Because professional liability is usually claims-made, work you did in the past generally stops being covered once the policy ends. If you retire or close the business, ask about run-off cover.
Does it cover work I did before I bought the policy?
Only back to the retroactive date. If yours has moved because you changed insurers, there may be a gap covering years of past projects. It is worth checking.
Can you review the policy I already have?
Yes. Send it with any client contract that demands cover, and we will tell you plainly whether the two match.
Not the question you had? Build the firm file and set out your own situation in plain words. A licensed broker reads it and replies in writing.
Engineering rather than advisory? structural & geotechnical engineers.
Send us the client contract.
The insurance clause decides what you need. Reading it first saves buying the wrong thing.