What Is the Best Type of Business Insurance for Consultants?

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Consultants generally need to maintain professional liability insurance and other types of liability coverage. Depending on their circumstances and the preferences of their clients, they may also be required to purchase general liability, workers’ compensation and commercial car insurance.

Keep reading to learn about some of the most important types of business insurance for consultants and how you can get coverage for your company.

Key Takeaways

  • Professional liability coverage insures business consultants against legal claims surrounding allegations of negligence, breach of contract and other failures to perform their professional duties.
  • General liability insurance is a foundational type of commercial coverage that may be required by prospective clients.
  • You will generally need to maintain commercial auto insurance if you use at least one company car and workers’ compensation insurance if you have multiple employees.
  • Business consulting insurance may cost around $74 per month but exact prices will depend on your policy details, claims history and location, along with the size and specializations of your consulting firm.

What Is Business Consultant Insurance?

Business consultant coverage is not necessarily a single insurance product but rather a collection of commercial insurance types that address the risks of the consulting industry. Many companies sell tailored insurance packages that are marketed to consultants.

Alternatively, you may be able to create your own policy by purchasing various independent coverage types that suit the needs of your business.

Are Consultants Required To Have Business Insurance?

While most types of commercial insurance are legally optional, consultants may be required to purchase commercial auto and workers’ compensation insurance. A personal car insurance policy won’t cover commercial activities, so you’ll need to purchase a separate policy if you use a vehicle for business purposes. Commercial auto policies generally have the same minimum requirements as personal ones.[1]

Meanwhile, most businesses with multiple employees are required to maintain workers’ compensation coverage throughout the United States. However, consulting firms in Texas are an exception because Texan companies only need workers’ compensation insurance if they are doing contract work for a governmental entity.[2]

What Types of Business Insurance Do Consultants Need?

Alongside commercial auto and workers’ compensation insurance, you may want to consider buying the following important types of liability insurance for consulting business professionals.

business consultant insurance coverage types infographic

Professional Liability

Professional liability insurance is among the most important types of coverage for consultants because it insures businesses against claims that they failed to properly perform their professional duties. Also known as errors and omissions (E&O) insurance, it can cover legal expenses in case you are sued for negligence, misrepresentation, breach of contract and more.

For example, professional liability insurance could fund the legal defense for a marketing consultant who is sued for giving bad advice to an agency after its expensive advertising campaign fails. Similarly, E&O insurance could pay a legal settlement if a regulatory compliance consultant unintentionally misled their client because they misinterpreted a new set of regulations.

General Liability

General liability insurance is one of the most basic types of commercial insurance because it provides coverage in case you are held liable for someone’s bodily injury, property damage or personal and advertising injury. It is also a crucial type of business insurance for consulting professionals because many prospective clients won’t work with consultants who don’t have general liability coverage.[3]

This coverage type can pay for a client’s medical treatments if they are injured on your property or their property repairs if any of their belongings are damaged or destroyed on the premises of your business. If a bodily injury or property damage claim escalates into a lawsuit, general liability insurance will also cover your legal fees and other associated costs. In addition, it covers you if you are sued for defamation or copyright infringement.

Commercial Property

Commercial property coverage insures the structure of the building you operate out of as well as items stored inside like equipment, furniture, inventory and documents. Many small business owners opt to bundle commercial property insurance with general liability insurance by purchasing a business owners policy (BOP).

BOPs may also include business interruption insurance, which makes up for lost revenue or relocation costs if you have to temporarily shut down your business due to a covered loss. For example, commercial property insurance would pay to rebuild your office building if it was burned down in a fire, while business interruption insurance would cover any costs associated with a temporary shift to remote working.


Directors and officers (D&O) liability insurance covers corporate executives and board members in case they are accused of misconduct such as misappropriating company funds or breaching fiduciary duty. D&O coverage can protect the top leaders at your consulting firm by paying their legal expenses if they are sued for mismanagement.

Cyber Liability

Cyber liability insurance can cover legal expenses if you are sued due to a data breach or similar cybercrime. For example, if you contract with a tech company and store confidential information about the company’s upcoming product on your laptop, cyber insurance could pay any costs that arise after a hacker gets into your computer and leaks that information.

Fidelity Bond

A fidelity bond can insure you against financial losses caused by an employee’s fraudulent or dishonest actions. For example, your fidelity bond could reimburse you after you find out that your firm’s accountant has been embezzling money.

Additional Coverages Consultants Should Consider

Depending on your circumstances, you may also benefit from adding the following types of coverage to your business consultant insurance policy:

  • Employment practices liability insurance (EPLI): EPLI insures your company’s managers in case they face lawsuits for discrimination, sexual harassment or other violations of employee rights.
  • Employee benefits liability (EBL) coverage: EBL insurance covers your business in case an employee sues due to mistakes in the administration of their benefits such as failing to enroll them in a benefit program or giving them inaccurate information about their benefits.
  • Commercial umbrella insurance: Commercial umbrella insurance provides excess liability coverage if a claim exceeds the coverage limits of your other liability policies. Umbrella insurance is not restricted to only one type of liability policy, meaning it could apply to costly claims for your general liability coverage, professional liability coverage, D&O liability coverage and more.

How Much Does Business Insurance for Consultants Cost?

The cost of business consultant insurance largely depends on the insurance company you select and the coverage types included in your policy. For example, the majority of consultants who buy coverage from NEXT Insurance pay around $74 per month for general liability, workers’ compensation and commercial property insurance.[4]

However, some NEXT Insurance customers may have to pay $225 or more monthly for the same coverage.[4] Some of the other factors that can influence your commercial insurance premiums include your specialties and the specific risks your business faces, the coverage limits you choose, the size of your company, your prior claims history and your location.

How Do I Get Business Consulting Insurance?

Business insurance for consultants is available from insurance carriers like Nationwide, State Farm, The Hartford, NEXT Insurance, Hiscox, biBERK and more. To find the best rate for your consulting firm, you should be sure to compare commercial insurance quotes online through an insurance marketplace like SmartFinancial.

Get Coverage for Your Consulting Firm


Do you need insurance to start a consulting business?

You are generally required to have commercial auto insurance if you use a car for business purposes and workers’ compensation insurance if you have multiple employees.[1][2] In addition, prospective clients may require you to have general liability insurance before they will work with your consulting firm.[3]

What liabilities do consultants have?

Without business insurance, consultants could have to cover their own legal expenses if they are sued for giving bad advice to a client, failing to fulfill contractual obligations or allowing sensitive client data to leak, among other things. In addition, they could have to cover hospital or repair bills out of pocket if a client is injured or their property is damaged on the premises of the consulting firm.

Do consultants need professional liability insurance?

Professional liability insurance is important for consultants because it protects them in case they are sued for negligence, misrepresentation, breach of contract and other failures to perform their professional duties.


  1. Nationwide. “Commercial Auto Liability Insurance.” Accessed June 26, 2023.
  2. National Federation of Independent Business. “Worker’s Compensation Laws – State by State Comparison.” Accessed June 26, 2023.
  3. State Farm. “Consultant Insurance Coverage.” Accessed June 26, 2023.
  4. NEXT Insurance. “Business Consultant Insurance Cost - June 2023.” Accessed June 26, 2023.

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