Consultant Insurance in Canada
Consultant insurance protects you when a client says your advice, plans or work cost them money. It’s usually built around professional liability, with general liability, cyber and equipment cover added to fit how you work.
What is consultant insurance?
Consultant insurance is a package for consultants and consulting firms, not a single policy. It’s usually built around professional liability (errors and omissions) insurance, with general liability, cyber cover and cover for your equipment added to fit how you work.
The core risk for a consultant is advice. A client acts on what you recommend, it doesn’t work out, and they say you were negligent. Even a claim that goes nowhere costs money to defend, and that’s what the professional liability part is for.
Which coverage does a consultant need?
The advice you give, where you do the work and what your contracts say decide it. Most consultants start with professional liability insurance for consultants, then add what their work calls for.
- Protects against
- Claims that your advice, an error or a missed step cost a client money
- Commonly needed by
- Almost every consultant whose clients act on their work
- Protects against
- Injury to others and damage to their property, plus advertising injury
- Commonly needed by
- Consultants who meet clients, visit their sites or advertise
- Protects against
- Data breaches, ransomware and the cost of notifying clients
- Commonly needed by
- Consultants who hold client data or work in clients' systems
- Protects against
- Your office, equipment and contents, including a home office's
- Commonly needed by
- Consultants with an office, or business equipment at home
- Protects against
- Lost income while a covered loss, such as a fire, shuts you down
- Commonly needed by
- Firms that rely on an office or premises to operate
- Protects against
- Claims against the people who run an incorporated firm
- Commonly needed by
- Incorporated firms with a board, partners or outside investors
Who needs consultant insurance?
A good test: does a client act on your advice, plans or work, so that a mistake could cost them money? Then consultant insurance is commonly expected, whether you’re a firm or working on your own.
What does a real consultant claim look like?
A consultant’s claim usually starts with a client saying your work cost them money. These examples are illustrative, not real claims, and whether a policy pays depends on its wording, the limits and the deductible (the part of a claim you pay yourself).
Common claims by type of consultant
Every type of consulting has its own pattern of claims, which is one reason insurers rate each one separately. These are common examples, not a full list.
| Type of consulting | A common claim | Cover that usually responds |
|---|---|---|
| Management and strategy | Advice the client acted on lost them money | Professional liability |
| HR and recruiting | A policy you wrote, or a candidate you placed, leads to a dispute | Professional liability |
| Marketing and communications | A campaign the client says was negligently planned | Professional liability |
| Marketing and communications | An ad that a competitor says copies its slogan or defames it | General liability, under its advertising injury cover |
| IT and software | An outage or lost data after work on a client’s system | Professional liability, with cyber cover for a breach |
| Finance, operations and projects | An error in a forecast or report the client relied on | Professional liability |
| Engineering and technical | A design or assessment error | Professional liability, often under the profession’s own rules |
What clients will ask for in the contract
Clients most often ask for proof of professional liability, a minimum limit and a certificate of insurance, and it’s often the first time a consultant needs insurance at all. Expect some or all of these in a services agreement:
Keep the wording your contract uses, and check that your certificate matches it. If something in the contract isn’t clear, ask the insurer or a lawyer before you sign.
Working from home or at a client’s site
Most independent consultants work from home, at a client’s office, or both, and each comes with its own gap.
- At home: home insurance commonly excludes or limits business activity. A client injured during a visit, business equipment above a small limit, and client data may not be covered. Ask your home insurer what applies, and expect to need business cover for the rest.
- At a client’s site: if you damage the client’s property or someone is hurt because of you, that’s a matter for general liability. Professional liability doesn’t cover physical injury or damage.
Our guide to sole proprietor insurance covers working alone in more detail.
If you’re in a regulated profession
Some consultants belong to a profession whose regulator or professional body sets insurance requirements, or runs its own insurance program. Accounting, engineering, immigration consulting and some financial services are examples, and the rules vary by profession and province.
If that’s you, check with your regulator first. Their rules may decide the type of cover and the minimum limit, and a general consultant policy may not meet them.
Between contracts, or when you stop consulting
Professional liability is usually written on a claims-made basis: the policy that responds is the one in force when the claim is made, not when the work was done. A claim about a contract you finished last year needs a policy in force now.
That catches people out when they take a break between contracts, or cancel their cover when they go back to employment. Before you let a policy lapse, ask the insurer about the retroactive date (the earliest work the policy covers) and an extended reporting period (extra time after the policy ends to report claims about past work). Our professional liability page explains claims-made cover in more detail.
How much does consultant insurance cost?
The price depends on what you do and who you do it for. Insurers commonly look at:
- The type of consulting you do, and the industries your clients are in
- Your revenue and the size of your typical contract
- The limits you need, which your contracts often set
- The deductible you choose
- Years in business and your claims history
- Whether you have staff or subcontractors
- Which coverages you add, such as cyber or general liability
To keep the cost down, describe your work accurately (a mismatch can cause trouble at claim time), use written contracts with a clear scope, keep records of your advice and decisions, pick a deductible you could actually pay, and compare quotes from more than one insurer. Websites quote all sorts of figures, but none of them can tell you what your business would pay. A quote for your own business is the only reliable number.
Is consultant insurance required?
Consultant insurance is often a condition of the work, even though no general law requires every consultant to carry it.
| Who may ask | What they usually want |
|---|---|
| Clients | Proof of professional liability, and sometimes a minimum limit, before you sign |
| Larger companies and public bodies | Insurance requirements set out in their procurement rules or contract |
| Agencies and firms that subcontract to you | Your own professional liability, so their policy isn’t the only one |
| Regulators of some professions | Cover set by the profession’s own rules |
What consultant insurance doesn’t cover
A consultant package covers a lot, but not everything. Here’s where common gaps go:
| Not covered | What usually covers it |
|---|---|
| A result you guaranteed in the contract | Generally excluded; describe the work, not the outcome |
| A breach of client data or a ransomware attack | Cyber insurance |
| Injury or damage at your office or a client’s | General liability insurance |
| A claim you knew about before the policy started | Generally excluded |
| Work outside what you told the insurer you do | Possibly not covered; keep your description up to date |
| Fines and penalties | Generally not insurable |
| Injuries to your own employees | Your provincial workers’ compensation board, such as WSIB in Ontario |
| Your vehicle | A separate commercial auto policy |
Get ready: what an insurer will ask
Having these answers ready makes quotes faster and more accurate:
- The type of consulting you do, and the industries your clients are in
- Your annual revenue, and the size of your largest typical contract
- Whether you work alone, with staff or with subcontractors
- Where you work: from home, an office or clients’ sites
- Whether you hold client data, and how much
- Any limits or insurance requirements in your contracts
- Whether you belong to a regulated profession
- Your claims history, and any claims you’re aware of
Consultant insurance FAQs
Do consultants need professional liability insurance?
Is consultant insurance the same as E&O insurance?
Does my home insurance cover my consulting business?
Do I need insurance as an independent consultant or contractor?
What happens to my coverage when a contract ends?
Does professional liability cover cyber attacks?
How much coverage should a consultant carry?
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