Attention Marketing Consultants: Protect Yourselves
A lot can go wrong when you’re a marketing consultant—but you'll be okay if you play it smart.
Today's marketing consultants are torn in many directions—online ads, social media, email campaigns, paid search. But a marketing consultant's business doesn't exist solely online. Like other business owners, marketing consultants still have to use and protect tangible equipment like mobile phones and laptops and they still have to travel to serve their clients.
Marketing consultants face a wide range of risks. Here are several questions I hear quite often, along with answers based on my experience.
It's easy to forget about the physical risks associated with consulting when so much of the work is intangible. What kinds of risks do tangible activities present?
A: You still have to use equipment—cell phones, tablets, laptops—and you still have to drive to meet clients on location, so it's important to recognize potential real-world property risks. For example, many small-business owners don't realize that a lot of personal auto policies don't cover damage that happens when you're driving for business. Commercial Property and Commercial Auto are key because they ensure that a marketing consultant's most important tools are protected from theft, accidents, and other damage.What about risks in cyberspace? Are marketing consultants vulnerable online?
A: For sure. A consultant's computer—which may contain sensitive data—can be hacked. But there's another layer, too. Let's say one of your clients hires you to overhaul its social media. You recommend a cloud-based software program to manage and plan posts. The client uses it. And then one morning you turn on the news only to learn that the platform you recommended just suffered a major data breach. If your client's data is exposed, you could be partly liable as the person who recommended the service.That's scary. How can consultants protect themselves?
A: It all starts with solid risk management. You should use strong passwords, change them regularly, and limit access to sensitive data. There are also insurance policies to protect you when the worst case scenario happens. A standard Cyber Liability policy covers first-party exposure—the kind you have if your own network is hacked. And there are carriers that write Errors and Omissions policies that include third-party Cyber coverage—the protection you need if a service you recommended is hacked. That type of coverage is usually sold to IT businesses, but ask your agent if you can get it as a rider if you recommend software to clients.
What about a client who doesn't take your advice, doesn't see results, and then sues?
A: That's also a case of professional liability. The real risk here is not whether or not you're actually liable; it's the risk that you'll go broke just defending your business in court. The cost of a lawsuit, regardless of outcome, can cause serious financial distress. Whether you think your client has a legitimate case or not, your legal expenses can be covered by an Errors & Omissions Insurance policy.So, what kinds of insurance do marketing consultants need?
A: You start with General Liability Insurance, which is baseline coverage—“slip-and-fall” insurance. It covers you when a customer trips in your office and breaks an arm, for example. More important for marketing consultants, it covers you for advertising injury claims: slander, libel, and copyright infringement. That may seem like something you don't have to worry about, but we're seeing a trend of more lawsuits over social media—and the courts have made it clear that social media posts can definitely be considered grounds for libel or slander. From there, you may be able to add Cyber and Commercial Auto in a bundled policy called a Business Owner's Policy.
It's really important to talk with a knowledgeable expert who understands your business before buying any policy, though. There is a lot of variation out there, and only experienced agents really know which ones offer what coverage.