Expert Advice
A Risk Management Guide for Marketing and Management Consultants

Chapter 2: Understanding Small Business Insurance for Independent Consultants
Part 1: What Is Small Business Insurance?
Do Independent Consultants Really Need Small Business Insurance?

As an independent marketing or management consultant, you may think that you don't have the equipment or overhead to justify purchasing business protection.

But consider what you would do if you were facing a $500,000 judgment for a professional liability lawsuit. Would you have the means to pay the claim on your own without completely depleting your life's savings?

The unfortunate truth is that not having the funds doesn't absolve your debt. Your personal assets can be collected to settle the claim, especially if your business is not registered as a limited liability corporation New browser window icon. (LLC).

To protect your commercial and personal finances, you need a plan that accounts for the unexpected turns your consulting business may take. This means planning for possible lawsuits and natural disasters that could strike your office.

After all, almost 40 percent of small businesses fail to reopen after a disaster, according to FEMA's article "Protecting Your Businesses New browser window icon.."

The premiums for business insurance pale in comparison to the losses you could suffer if you decide to take your chances with human and Mother Nature. That's why it's important to consider business insurance as an investment in your consulting company's continuity, rather than an optional expense.

About 40% of businesses fail to reopen after a disaster.

Now let's take a closer look at what it means to be classified as a sole proprietor or an independent contractor.

Next: What Does It Mean to Be a Sole Proprietor or Independent Contactor?

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