The Hartford Introduces Low Cost Liability for Consultants

May 26, 2010

The Hartford Financial Services Group, Inc. now offers a miscellaneous professional liability policy with premiums beginning at less than $1,000.

The Hartford offers miscellaneous professional liability coverage through its Hartford Financial Products (HFP) unit. The coverage is available as a stand-alone policy or as part of the company’s Private Choice Encore!! Policy.

The miscellaneous professional liability policy is designed for small firms that provide advice or services requiring specialized knowledge. Generally, these firms generate less than $1 million in revenue and have fewer than 10 employees. They represent a range of industries, including marketing or management consultants, executive coaches, career counselors, travel agents and event planners.

For example, a management consultant might be hired by a company’s president to help the organization with strategic planning and lowering its cost structure. The consultant may provide advice on a strategy that redefines management roles and delegation, initiates spending controls, and uses a new staffing model to address the organization’s needs. If the client experiences a negative impact to its bottom line after implementing the consultant’s advice, the client may sue the consultant for negligence in rendering advice. Similar cases have resulted in more than $200,000 in settlement and defense costs.

Or, a self-employed market researcher might provide advice to a client on whether to establish a new product line. If the new line is introduced – and fails – the client might sue the market researcher, claiming the failure was a result of faulty research.

“Even if the lawsuit is not successful, the consultant can incur some hefty defense costs in fighting the suit,” said Stephen Prymas, vice president of financial products underwriting at The Hartford. “For many small firms, that could mean the end of their business.”

Prymas pointed out that a general liability or personal umbrella policy typically does not cover liability exposures related to business services. Sometimes, a professional services contract will require a consultant to carry professional liability coverage, but too often this protection slips through the cracks.

Key features of The Hartford’s miscellaneous professional liability policy include:

  • A tailored definition of professional services
  • Coverage for personal injury, such as libel and slander, arising from the professional services
  • Coverage for punitive damages, where allowed by law;
  • Liability coverage for erroneous work performed by a subcontractor;
  • Coverage extension for expenses related to disciplinary proceedings in which a professional is brought before a regulatory body or association.

The Hartford offers separate policies for several industries that are not eligible for professional liability coverage under Private Choice Encore!!. These include attorneys, accountants, private equity fund managers, technology firms and real estate firms.

Source: The Hartford

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