Management Consultant Insurance - What Do You Need?

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Working as an independent management consultant can be a fantastic option for anybody in the consulting world looking to experience new industries, choose their own projects or gain flexibility in order to pursue other endeavours. That being said, if it’s your first time working as a freelancer you might not be aware of the new risks you’re exposed to when joining a business as an outsider.

This guide will cover everything you need to know about working insurance while freelance management consultant, from the types of insurance you’ll need to know about through to how much they cost and hopefully answer any questions you might have.

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Popular Types of Insurance for a Management Consultant

As a management consultant, you’ll be exposed to a wide variety of risks and dangers on any given day. From protecting your client’s data to making sure you’re covered in the event of an accident, insurance is a great way to protect yourself from something going wrong.

Some coverages, such as Public Liability aren’t a legal requirement, but many employers won’t consider bringing you into their offices if you don’t have a policy. Employers' Liability, on the other hand, is a legal requirement in the UK if you hire any staff—including interns or temps, so keep this in mind if you’re going to bring anyone on board.

Common Types of Management Consultants Insurance & What They Cover
1.Public LiabilityCovers you if a third party is injured or incurs damages as a result of your work
2.Employers' LiabilityProtection if someone you’ve hired becomes unwell or is injured as a result of working for you
3.Professional IndemnityIf a client is unhappy with your work or feels you were professionally negligent
4.Cyber Security/Data RiskInsurance in the event that you’re a victim of cybercrime and lose your client’s confidential data
5.Personal AccidentCompensation if you’re unable to work due to injury or illness and aren’t earning

Management Consultant Insurance Examples

  • Public Liability: While walking through a client’s office, you fall and damage a desk. Your client asks for you to pay for the replacement
  • Employers’ Liability: A contractor you’ve hired develops a back problem while working with you, and believes you have not provided them with adequate support
  • Professional Indemnity: You’ve produced an organisational chart for a company, but they believe the work is rushed and are unhappy with it. They sue you to have the chart redone
  • Cyber Security/Data Risk: Your laptop is hacked and a client’s confidential data is stolen. They sue you for damages
  • Personal Accident: An accident while riding your bike puts you out of action for a month. Your Personal Accident coverage covers a % of your monthly income

FAQ’s

Yes, absolutely. Most quality management consultants would not feel comfortable offering out their advice and service without the safety net of insurance protecting them if something goes wrong.

You may also find that many potential employers, both direct clients and recruitment agencies, insist that you are sufficiently covered before bringing you onboard—this is likely to include a combination of Public Liability, Professional Indemnity and Employers’ Liability, so it’ll be worth you having coverage before even bidding for projects.

While you’re unlikely to need to break the bank in order to buy sufficient coverage, it’s always worth trying to get the best price possible:

  • Gather and compare quotes from multiple providers
  • Lower coverage amounts (although keep in mind some clients might have a minimum level of cover required)
  • More years of experience as a management consultant
  • No prior claims or convictions

What insurances do you need to be a freelance management consultant?

Public Liability is a must-have for most management consultants. Many clients will insist you have a policy before bringing you on board, but even if they don’t it’s still a good idea to hold a policy to protect you if something goes wrong. Considering the average Public Liability claim in 2019 was £13,500 it’s easy to see why most consultants won’t work without it.

If you hire any staff, whether they’re full-time, part-time, contractor or intern, you’re legally required to hold Employers’ Liability. The punishments for failing to do so are severe—up to £2,500 in fines for each day somebody works for you without a sufficient Employers’ Liability policy.

Professional Indemnity is a must-have in the management consulting world, especially so if you’re working as a freelancer or independent. Clients won’t always be happy with your work, and could sue you to cover the costs of any work that needs redoing or damages caused by your advice, which is where Professional Indemnity comes in.

If you’re working with the data of other businesses, perhaps keeping it on your personal computer or taking it home with you, then you’ll want to consider Cyber Security coverage. While you always try to be as safe as possible, cybercrime does happen and can be costly when it does—you can never be too safe online.

Finally, Personal Accident Insurance can help protect you if you’re unable to work due to injury or illness. It’s not mandatory, but is especially important to freelancers, who don’t have the income security of full-time employees.

How much does Management Consultant insurance cost?

The average cost for a full management consultants insurance policy, including £2M of Public Liability (PL), £2M of Professional Indemnity (PI) and £10M of Employers’ Liability (EL) is roughly £400 per year. For a policy of only £2M of Public Liability, annual cover starts from around £90 per year—about £30 less than the average cost of Public Liability insurance in the UK.

graph showing the average cost of management consultant insurance in the UK
Average Cost of Management Consultants Insurance
£2M Public Liability (PL)£90.71
£5M PL£123.83
£2M PL, £2M Professional Indemnity (PI)£257.79
£2M PL, £10M Employers’ Liability (EL)£129.36
£2M PL, £2M PI, £10M EL£411.16

In a situation fairly unique to management consulting, adding Employers' Liability to your insurance package doesn't actually increase your annual cost by much. This is because many businesses, especially recruitment firms, will insist you hold a policy before allowing you work through them, as a way to "prove" you're an independent consultant and not a contracted employee, who would be exposed to different income tax regulations—however insurers clearly don't think you're ever likely to make a claim.

Where Can I Get Management Consultant Insurance?

You can compare Management Consulting Professional Indemnity insurance quotes here, but otherwise many of the UK’s leading insurers will happily put together a package to cover you for however much or little you require. A quick Google search for “Management Consultants Insurance” should yield the results you’re looking for.

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More Information on Types of Management Consultants Insurance

Public Liability Insurance

Public Liability Insurance for management consultants will protect you if a third party (other consultants, general public, customers/clients) incurs damages or injury as a result of your work. It’ll pay out for any legal expenses you accrue during your defense and any compensation a court awards against you.

It typically comes in four levels, £1M, £2M, £5M or £10M. You’re unlikely to need more, but it can be available if you request.

Employers’ Liability Insurance

You must hold an Employers' Liability Insurance if you employ any staff. As a contractor, some businesses and recruitment firms may also require you to hold a policy in order to work with them in order to protect themselves if you’re unable to work or can’t complete the contract.

Employers’ Liability will protect you from claims made by staff that their work for you caused them to become unwell or if they were injured while at work. Like Public Liability, it’ll cover any legal expenses and compensation awarded.

Professional Indemnity Insurance

Professional Indemnity Insurance is generally considered a must-have in the management consulting industry. It’ll protect you against claims made by your customers who are unhappy with the service they received, or if they believe you were professionally negligent while working for them.

“Professional negligence” is a fairly broad term, but would include things such as producing a low-quality report or advising your customer to make a decision that ends up being wrong. Given that you’ll spend your day offering advice to your customers, it’s definitely well worth making sure you’re covered.

Cyber Security Insurance

More important than ever, Cyber Security Insurance Insurance will help protect you if your management of a customer’s data results in losses or damages. It’ll cover you both if a fraudster gets hold of your data or manages to trick you into parting with money on behalf of the business you’re working for—perhaps through a fraudulent expense claim.

Personal Accident Insurance

Personal Accident Insurance is applicable to anybody working as a freelancer/independent, not just management consultants. It’ll help cover you in the event that you’re unable to work due to injury or illness, and help you cover your bills and costs while you recover.

Management Consultant Salary UK

The average management consultant in the UK earns £44,894 per year. Consultants in London are by far the best off in the UK, earning £56,223 annually—almost £12,000 more than the rest of the country, and nearly double what the average consultant in Wales earns.

graph showing the average salary for welders in the UK
RegionAverage Salary
Wales£29,231
Yorkshire£33,577
South West£36,647
Scotland£38,535
East£40,547
East Midlands£40,702
West Midlands£40,961
South East£44,894
National Average£44,894
London£56,223

Earnings estimations were taken from the Annual Survey of Hours and Earnings

Quotes were gathered for a sample consultant in North-West London with 2-3 years of previous consulting experiences. No fewer than five quotes were averaged in order to generate our results. You may find your cost higher or lower depending on the risk profile your insurer evaluates you on.

Luke Masters

Prior to NimbleFins, Luke studied economics at Brunel University and worked at FreshMinds, Investigo and BMW. His work in data analytics, pricing, strategy and business development now help him write business insurance content to support SMEs. Read more on LinkedIn.

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The guidance on this site is based on our own analysis and is meant to help you identify options and narrow down your choices. We do not advise or tell you which product to buy; undertake your own due diligence before entering into any agreement. Read our full disclosure here.