Professional indemnity insurance for interim managers
Working as an interim or consultant produces potential insurance problems that would not occur if you worked as a company employee.
Professional indemnity insurance covers you against the cost of litigation in case of your negligence when working on clients affairs. It protects your business against claims for loss or damage made by a client or third party if you make mistakes or are found to have been negligent in some or all of the services you provided. PI insurance will also cover legal costs.
In many professions, individuals are required to have PI insurance cover as a regulatory requirement or as part of their professional authorisation. This includes solicitors, accountants, architects, mortgage intermediaries, insurance brokers and financial advisers. Others such as consultants, advertising and PR professionals, and designers choose to have this type of insurance. You should certainly have PI cover for the work you do as a consultant or interim manager. Most interim providers will insist that you hold this cover.
The amount of cover you will need will depend on the type of work you are doing, but cover of £250,000 to £500,000 is probably sufficient for most assignments. Ultimately it depends on how much damage you could do to your client if things went wrong.
The premium for cover at this level is currently in the region of £250 to £400 per annum. If you are already a member of a professional association, you should consider approaching one of the brokers that deal with your particular association, as they will be specialists in your field. Otherwise you might consider an insurance broker that specialises in the interim management and consultancy market.
In order to avoid paying unnecessary premiums, it is recommended that you do not take out insurance until immediately prior to starting your first assignment.
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