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Professional Liability Insurance
for Marketing Agencies and Consultants
As a marketing consultant, your clients are counting on you to present their company in the most positive light. Perception is everything, and it only takes one mistake in a marketing campaign to damage your client's business and potentially kill your client relationship. Too often, clients become plaintiffs, turning to lawsuits to reclaim money they feel they have lost due to an error or omission you make while performing your professional services.
That's where professional liability insurance comes in. Also referred to as "errors and omissions" or "E&O" insurance, professional liability insurance is there for your marketing consulting business if one of your clients should claim that you're responsible for its financial loss.
For example, suppose a client hires you to create an edgy marketing campaign to promote a new consumer product. Your team decides to infuse the campaign with a little racy humor, and the client gives it the green light. But once the campaign is unleashed, customer complaints start rolling in. Your client is angry, and they cut off communication and refer you to their lawyer. Soon you find yourself on the receiving end of a lawsuit, and instead of serving your other clients, you're hiring your own lawyers and spending your time fighting your case in court.
With professional liability insurance, you don't have to worry about how you'll pay for it all. Up to policy limits, your insurance will pay for your lawyers' time, the income you lose while in court instead of working, any settlement the court may order you to pay, and other expenses as defined by your policy.
What You Need to Know
E&O insurance policies are typically issued in increments of $1 million and have per-claim deductibles ranging from $1,000 to $25,000. These types of policies are issued on a "claims-made" basis, meaning that coverage must be in force both at the time of the alleged incident and at the time the claim is made, so it's wise to keep your policy in force even after you've completed an engagement.
Because your client may require that you carry professional liability coverage, read the fine print in your contract to be sure you have the amount specified, and talk to a Business Insurance Now marketing consulting insurance expert to be sure your E&O coverage matches your risks.
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Professional Liability Insurance Tips
- Professional liability coverage is generally issued on a "claims made" basis. This means that for a claim to be covered, the claim must be made while the policy is still active, so it is smart to keep your policy long after your engagement is complete. Also, the alleged error or omission must be covered by the policy and must have taken place while your policy is in force.
- Some situations are not covered by professional liability insurance, such as if you should get sued for something like stealing a client's customer away. Many marketing consultants protect themselves with a client contract that outlines procedures for conflict resolution and clearly states their and the client's rights.
- It only takes one client relationship gone bad to spark a lawsuit. Even if you do your best work, you could still get sued by a disgruntled client. This is why it's critical to carry professional liability insurance, even if you've never been on the receiving end of a lawsuit.