Operating as a sole trader does not remove the professional liability exposures associated with consulting work.

A sole trader Consultant may still face a claim alleging that advice or professional services caused financial loss.

When can Professional Indemnity Insurance be relevant? #

It can be particularly important where the Consultant:

• Provides professional advice.
• Prepares reports or recommendations.
• Advises businesses on decisions or strategy.
• Works under contracts requiring Professional Indemnity Insurance.
• Works for government or corporate clients.
• Provides services where an error could cause significant financial loss.

Does having a small business reduce the risk? #

Not necessarily.

The size of the consulting business does not always reflect the potential size of a claim.

A sole Consultant may provide advice affecting a large project, transaction or business decision.

Can clients require a sole trader to hold insurance? #

Yes.

Clients can impose minimum Professional Indemnity or Public Liability limits as part of their contractual requirements.

The required limit should still be reviewed against the actual services and exposure rather than accepted automatically as the correct level of cover.