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Why Professional Indemnity Insurance Alone Won’t Cover Your Consultancy

Running a consultancy business in the UK carries specific risks, whether offering marketing advice, IT services, finance support, or management consultancy. While professional indemnity insurance is often seen as essential, relying on it as the only form of cover could leave gaps in protection.

We explain why professional services insurance should include more than just indemnity cover and highlight which additional policies could help protect your business against a wide range of risks.

What Does Professional Indemnity Insurance Cover?

Professional indemnity insurance is designed to protect consultants against claims made by clients due to:

  • Professional negligence
  • Errors in advice or services
  • Breach of confidentiality
  • Defamation related to professional work

If a client suffers financial loss because of your consultancy service, insurance can cover legal actions, compensation settlements, and defence costs. This provides important financial protection when a claim arises.

However, this type of cover is not designed to protect against every risk faced by a consultancy business.

The Limits of Professional Indemnity Insurance

Consultants often believe that professional indemnity insurance cover is all they need. But there are several risks it may not include, such as:

  • Injury to visitors at your office or co-working space

  • Accidental damage to property belonging to others

  • Cyber attacks or data breaches

  • Employee-related claims (if you have staff)

Relying solely on indemnity insurance could leave a consultancy exposed. Other insurance is designed to complement professional indemnity, providing a level of cover that supports business continuity.

Additional Insurance Consultants May Need

Public Liability Insurance

For any consultancy that hosts client meetings or visits client sites, public liability insurance is important. It can cover:

  • Injury to clients or the public

  • Damage to third-party property

Even if you work from home, this insurance offers peace of mind during face-to-face interactions.

Cyber Liability Insurance

Many consultants store sensitive client data or use cloud systems. Cyber liability insurance can cover:

  • Data breaches

  • Hacking incidents

  • Loss of client information

As digital risks grow, small business owners increasingly arrange this type of cover alongside professional indemnity.

Employers’ Liability Insurance

If you employ staff, even part-time or freelance support, employers’ liability insurance is a legal requirement in the UK. It covers legal actions and compensation claims made by employees due to workplace injuries or illnesses.

Why One Policy Is Rarely Enough

Consultants face a wide range of risks that one insurance policy alone may not address. Combining different covers could help ensure peace of mind and business resilience. Common examples include:

  • A client trip accident not covered by professional indemnity

  • A cyber attack resulting in client data loss

  • An employee claim relating to workplace safety

We support businesses in arranging tailored consultant and professional services insurance that reflects these varied exposures.

Which Insurance Might Fit Your Consultancy?

The right combination depends on factors such as:

  • Your industry

  • Size and structure of your business

  • Client expectations

  • Whether you employ staff

We help identify the correct amount of cover and type of cover needed for consultants across fields such as marketing, IT, finance, HR, and management.

Summary: Building Complete Cover for Your Consultancy

While professional indemnity insurance cover forms the foundation of many consultancy protection strategies, it is rarely enough on its own. By arranging additional policies such as public liability insurance, cyber liability insurance, and employers’ liability insurance, consultants can help protect their business from a full spectrum of insurance claims and legal challenges.

Arranging the right mix of covers provides financial protection while offering genuine peace of mind that your consultancy is supported, whatever happens.