Project Management Insurance Policy Information
Project Management Insurance. As a project manager you're probably wondering whether or not you need business insurance. The answer is yes. And, yes, there is more than one option or type of coverage you can purchase. So lets look at the project management insurance options, additional coverages, and what you should consider, based upon the type of project you manage, who you work with, and other factors.
Project management insurance protects your business from lawsuits with rates as low as $27/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked project manager insurance questions:
- What Is Project Management Insurance?
- How Much Does Project Management Insurance Cost?
- Why Do Project Managers Need Insurance?
- What Type Of Insurance Do Project Managers Need?
- What Does Project Management Insurance Cover & Pay For?
What Is Project Management Insurance?
Project management insurance is a type of insurance coverage designed specifically for project managers. It provides financial protection for the project manager in the event that a project goes over budget, is delayed, or experiences other unexpected events.
The insurance may cover costs related to cost overruns, delays, or the cost of hiring a replacement project manager. This type of insurance is often required by organizations or clients to ensure that the project is completed within budget and on time, and to protect the project manager from financial losses in the event of unexpected events.
How Much Does Project Management Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small project managers ranges from $27 to $39 per month based on location, size, payroll, sales and experience.
Why Do Project Managers Need Insurance?
Project managers are responsible for managing complex projects and ensuring they are completed on time, within budget, and to the satisfaction of stakeholders. They are also responsible for ensuring the safety and wellbeing of their team and the public during the project. With these responsibilities come several risks and potential liabilities.
Therefore, project managers need insurance for several reasons:
Liability protection: Project managers are liable for any accidents or incidents that occur on the project site. Insurance can provide financial protection against claims made by third parties for property damage, personal injury, or death.
Professional indemnity: Project managers may be held liable for any errors, omissions, or breaches of professional duty that result in loss or damage to clients or stakeholders. Professional indemnity insurance can provide protection against such claims.
Business interruption: Project delays, unforeseen circumstances, or accidents can result in significant business interruption. Insurance can provide financial compensation for lost income and additional expenses incurred as a result of the interruption.
Contractor's all-risk: Project managers may be held liable for any damage or loss of materials or equipment during the project. Contractor's all-risk insurance can provide protection against these risks.
Workers' compensation: Project managers are responsible for the safety and wellbeing of their team. Workers' compensation insurance can provide financial protection for employees who are injured or become ill as a result of their work.
In conclusion, project managers need insurance to protect themselves, their team, and their clients against potential risks and liabilities. It provides financial protection and peace of mind, allowing project managers to focus on delivering successful projects.
What Type Of Insurance Do Project Managers Need?
When choosing project management insurance policies, there are a number of options as it pertains to type of and level of coverage you can buy. Among these are:
- Commercial General Liability - This covers third party bodily injury and property damage claims. So if a client falls in your office, equipment or other property is damaged, or other injuries ensue, you are protected with coverage for court costs, legal fees and awards.
- Professional Liability - Also know as errors and omissions insurance (E&O), this covers negligence claims. There are many areas that people can claim negligence on - whether they are real or frivolous. Professional liability is one of the most important coverages for project managers.
- Project Insurance - You first define the project's scope and then purchase this optional coverage. This project management insurance coverage applies only work on a single project rather than to the entire business operation
- Workers Compensation - As a project manager you hire employees; these employees can get hurt and sue you. Your employer's coverage will protect you from these lawsuits, and pay damages, hospital bills, medical costs, and other expenses if an employee is hurt on the job. Plus workers comp is required by most states for any non-owner or partner employees and often contractually required.
- Equipment & Property - project managers typically have offices. If desks, fax machines, computers, or other equipment is damaged, lost, or stolen, this policy option will protect you from having to pay out of pocket to repair or replace these items.
- Protective Liability - This optional coverage doesn't have a standard form and limits apply separately to each project you are working on with a client. This coverage protects you against liability for injury or damage caused by independent contractors doing work on your behalf.
Some of these are optional coverage options you can add to your project management insurance policy. Depending on the type of project management work you do, the clientele you work with, who your employees are, and other factors, will help you determine what to buy, and to what extent to purchase additional protections.
Additional Project Manager Coverages
As a project manager, you can add on business interruption coverage as well. As the name implies, if a project is interrupted (due to weather, loss of profit, damaged equipment, etc.) you won't be liable to clients for these losses (or are covered to the extent to which you choose to add this protection).
Directors and officers liability coverage is also an option you can tag on to your project management insurance policy. If any member of your board of directors are sued, you are protected.
Another optional policy coverage term you can add to your coverage is consultants insurance coverage. Brokerage firms, financial consultants, and other specialists you hire, are an extension of your company.
If they don't give great advice, a client might sue you. This optional coverage is going to protect you from these lawsuits, and liabilities which extend from the project or work for them.
What Does Project Management Insurance Cover & Pay For?
Project management firms can face various types of lawsuits due to the complex nature of their work. Here are some common reasons for lawsuits and how insurance can help protect them:
Negligence or Errors and Omissions: If a project management firm fails to deliver the project on time, within budget, or to the required quality standards, clients may sue them for negligence. Professional Liability Insurance, also known as Errors and Omissions (E&O) Insurance, can help cover the legal defense costs, settlements, and judgments arising from such lawsuits. This insurance policy typically covers financial losses suffered by clients due to errors, omissions, or negligence of the project management firm.
Breach of contract: A client may sue the project management firm for not fulfilling their contractual obligations. This can include failing to meet deadlines, not adhering to the project scope, or not complying with specific terms and conditions. Contractual Liability Insurance can help cover the legal costs, settlements, and damages resulting from breach of contract claims..
Employment-related lawsuits: Project management firms may face lawsuits from their employees, such as wrongful termination, discrimination, or harassment. Employment Practices Liability Insurance (EPLI) can help cover the legal defense costs, settlements, and judgments arising from employment-related claims.
Workplace accidents or injuries: If an employee or subcontractor is injured while working on a project managed by the firm, the firm may be held liable for their medical expenses, lost wages, and other damages. Workers' Compensation Insurance can help cover these expenses and protect the firm from potential lawsuits.
Property damage or bodily injury: In the course of managing a project, the firm's actions may inadvertently cause damage to a third party's property or result in bodily injury. General Liability Insurance can help cover the legal costs, settlements, and damages associated with third-party property damage or bodily injury claims.
Cyber liability: Project management firms often handle sensitive client information and may be targeted by cybercriminals. If a data breach or cyberattack occurs, the firm may be held liable for the resulting damages. Cyber Liability Insurance can help cover the costs of legal defense, public relations efforts, notification and credit monitoring for affected individuals, and regulatory fines or penalties.
For each of these examples, insurance can help pay for the costs associated with a lawsuit, including legal fees, settlements, and judgments. However, it's essential for project management firms to carefully review their insurance policies to ensure they have adequate coverage for their specific risks and to comply with any applicable regulations or industry standards.
Commercial Insurance And Business Industry Classification
- SIC CODE: 8742 Management Consulting Services
- NAICS CODE: 541611 Administrative Management and General Management Consulting Services
- Suggested Workers Compensation Code(s): 8810 Clerical Office Employees NOC
Description for 8742: Management Consulting Services
Division I: Services | Major Group 87: Engineering, Accounting, Research, Management, And Related Services | Industry Group 874: Management And Public Relations Services
8742 Management Consulting Services: Establishments primarily engaged in furnishing operating counsel and assistance to managements of private, nonprofit, and public organizations. These establishments generally perform a variety of activities, such as strategic and organizational planning; financial planning and budgeting; marketing objectives and policies; information systems planning, evaluation and selection; human resource policies and practices planning; and production scheduling and control planning. These establishments are characterized by the breadth and scope of the problems they address.
- Administrative management consultants
- General management consultants
- Human resource consultants
- Management engineering consultants
- Management information systems consultants
- Manufacturing management consultants
- Marketing consultants
- Operations research consultants
- Personnel management consultants, except employment service
- Physical distribution consultants
- Site location consultants
Project Management Insurance - The Bottom Line
Of course each and every project manager will deal with different clients and projects. Cost of projects, equipment, and services you offer, will vary in each case as well. For this very reason, before you do purchase project management insurance, it is important to consider all of the optional coverage terms you can add on to your policy.
Of course you also have to consider how much you can afford, in order to ensure you choose the top insurance provider, for the coverage you ultimately choose to purchase as a project manager.
Additional Resources For Professional Services Insurance
Get informed about small business professional services insurance, including Professional liability, aka errors and omissions (E&O insurance), that protects your business against claims that a professional service you provided caused your client financial loss.
- Answering Service
- Armored Car
- Attorney Lawyer
- Background Music Services
- Business Consulting
- Chemical Engineers
- Civil Engineers
- Claims Adjuster
- Commercial Laundries
- Commodity Broker
- Corporate Wellness
- Court Reporter
- Credit Bureaus
- Debt Collection Agency
- Detective Agency
- Diaper Services
- Electrical Engineering
- Environmental Consultant
- Executive, Career & Life Coaching
- Executive Search Firm
- Expert Witness
- Financial Planner
- Financial Services
- Funeral Directors
- HR Consultant
- Inspection Bureaus
- Insurance Agents & Brokers Insurance
- Mediator - Arbitrator
- Medical Billing
- Music, Drama & Dance Therapy
- Office Machine Repair & Maintenance
- Piano Tuners
- Project Management
- Safety Consultants
- Speakers Bureaus
- Tax Preparer
- Temporary Staffing
- Title Abstractors
- Valet Parking
- Specialty Consultants
- Specialty Service Business
The professional services industry, which includes occupations such as lawyers, doctors, accountants, and architects, often deals with sensitive and complex issues that carry a high risk of liability. These professionals are expected to provide their clients with expert advice and guidance, and any mistakes or oversights can result in significant financial consequences for both the client and the professional. This is where insurance comes into play.
Business insurance provides protection against the financial repercussions of potential mistakes or accidents that may occur while providing professional services. For example, a lawyer may make an error in their legal representation that leads to a financial loss for their client. Without insurance, the lawyer would be personally responsible for covering the cost of this loss. Insurance helps to protect professionals from these types of financial burdens and allows them to focus on providing high-quality services to their clients.
In addition to protecting against financial losses, commercial insurance can also provide legal defense for professionals facing legal action as a result of their work. This can be especially important for professionals in high-stress or high-risk fields, such as doctors or architects, who may be at a higher risk of being sued for professional negligence.
Overall, the professional services industry needs insurance to protect against financial losses and legal action, ensuring that professionals can continue to provide high-quality services to their clients without the added stress and burden of potential financial consequences.
Minimum recommended small business insurance coverage: Business Personal Property, Employee Dishonesty, Accounts Receivable, Computers, Valuable Papers and Records, General Liability, Employee Benefits Liability, Professional Liability, Umbrella Liability, Hired and Non-owned Auto Liability & Workers Compensation.
Other commercial insurance policies to consider: Building, Business Income with Extra Expense, Earthquake, Equipment Breakdown, Flood, Computer Fraud, Forgery, Money and Securities, Special Floater, Cyber Liability, Employment-related Practices Liability, Business Auto Liability and Physical Damage and Stop Gap Liability.