Professional Liability Insurance

A management consultant recommended a restructuring plan to their client, a manufacturer. The plan included a new supply chain management process.

After the plan was drafted, the capabilities of several of the manufacturer’s suppliers changed. The consultant provided revised recommendations, which the manufacturer ignored, causing delays. It took 18 months to fully implement the plan.

The manufacturer sued the consultant, alleging they had not fully investigated the supply chain issues and had used unrealistic assumptions in the plan. The manufacturer claimed $150,000 in additional costs to get new suppliers and $350,000 in lost profits during the transition.

While investigating the claim, it was discovered that the revised recommendations were not communicated in writing, and written reporting during the implementation phase was insufficient to fully defend the consultant in this matter.

The consultant’s insurer resolved the matter prior to trial and paid $135,000 to cover settlement and defense costs.

The provision of the claims examples are for illustrative purposes only and should not be seen as an indication as to how any potential claim will be assessed or accepted. Coverage for claims on the policy will be determined by the insurer, not BizInsure for Agents.