Do I Need Liability Insurance As A Life Coach?
In most coaching relationships, nothing ever goes wrong. But if it does, you want to be prepared. Find out what you need to know about insurance for coaches.
Why Would A Life Coach Need Insurance Coverage?
You became a coach to help people. And if you’re like most new life coaches, the very idea that a client might eventually summon you to a courtroom seems unthinkable.
How does that even happen?!
While relatively rare, the reality is that it can. We enter into each coaching relationship with the very best of intentions, but at the end of the day, it’s still a business relationship. Complaints can and do arise.
What may or may not happen over the course of your coaching career is anyone’s guess. In the majority of cases, nothing ever goes wrong. But if it does, you want to be prepared.
Where Life Coaches Are Most At Risk
According to author Amy Montemarano, “most of the publicly available lawsuits against coaches fall into two broad categories: (1) breach of contract, and (2) tort (including claims of negligence, fraud, misrepresentation, and infliction of emotional distress).”
The best protection against these types of claims is to make sure that you consistently:
- Operate within your scope of practice as a life coach
- Don’t give advice that you’re not qualified to offer
- Honor the boundary between life coaching and therapy
Now here’s the tough part. Even when you’re doing everything right, someone may still file legal action against you. From there, it’s up to a court to decide the merits of their claim.
This is where professional liability insurance comes into play. Even a frivolous lawsuit requires time, money, and resources to address and defend against.
Much like homeowner’s insurance, liability coverage is a form of protection for your business that you hope you’ll never need to use. While life coaches practicing in the United States are not currently required to have it, investing in coverage can be a sound business strategy.
(If your coaching business is based in another location, we recommend looking into your local laws and regulations in addition to the information presented here.)
What Kind of Life Coach Insurance Do I Need?
There are several types of coverage available to life coaches, and the right policy for you will depend upon the particulars of your business. Let’s quickly review the list of insurance coverage options, with a short explanation of each.
General Liability Insurance is the most common form available, and will cover the most bases. According to Truic, it typically includes:
- Legal defense and judgment
- Personal and advertising injury
- Bodily injury
- Property damage
Situations where General Liability comes into play include a client claiming that the services you provided didn’t align with what had been advertised. If you are seeing clients in person at your office or in your home, it also addresses injuries that may occur on the premises.
Professional Liability Insurance protects you if giving advice or providing expertise is part of your work. It covers you in the event that a client files suit claiming that the advice you gave was faulty or otherwise damaging. This type of coverage is also known as Errors and Omissions insurance, and it helps to protect you… even if you haven’t actually made a mistake, but someone says you did.
Home-Based Business Insurance is worth a look if you are operating out of your place of residence. Check your homeowner’s or renter’s insurance policy to see if your business equipment and operations are covered. Sometimes an addendum to your existing policy is required.
Other related forms of business insurance that a life coach might consider include:
Disability Insurance If you’re just stepping into self-employment, remember that you won’t have sick leave, vacation days, or PTO unless you budget for it! Disability coverage helps fill the income gap if you become so sick or injured that you cannot work for an extended period of time. This type of insurance can help in the event of unforeseen health related challenges, and is particularly beneficial for freelancers and solo-preneurs.
Cyber Liability Coverage can protect you in the event of a data breach. If you store information about your clients such as their address or credit card number, consider looking into this.
If you rely on third party platforms for your data management (credit card processors, client tracking systems, etc.) the fallout from a data breach is typically their responsibility to address. Take a good look at your vendors’ security policies to ensure they meet a standard that you are comfortable with on behalf of your clients.
Sexual Abuse Liabilty Coverage is most commonly taken by those who practice touch therapy. If you combine life coaching with yoga, massage, or other modalities that put you in physical contact with your clients, this form of protection is worth looking into.
How Much Does A Liability Policy Cost?
In North America, life coaches generally pay somewhere between $200 - $1,000 per year for a general liability insurance package.
Where Do I Get General Liability Insurance?
You can start today by requesting quotes from several companies to compare general liability rates and policies. Some providers that offer life coach insurance include:
Simply Business offers a free quote comparison service online. You can fill out a single form and receive quotes from several different insurance providers.
When it comes to building your business, we know this isn’t one of the most exciting topics on your list. So if you’ve read this far, congratulations! You’re well on your way to creating a strong foundation for your future.
Wondering what other legalities you should be aware of in the process of establishing your coaching business? Consider checking out our guide Legal 101 for Life Coaches. In it, you’ll get the rundown on:
- Privacy policies
- Client contracts and agreements
- When and how to incorporate your business
- How to properly use other people’s imagery and ideas on your website and in your content
- Handling client refunds
Ready to Become A Life Coach?
One of our values at Lumia is that we dare to be different. Our life coaches ignore the expectations society tries to impose on them, and seek to live from their own truth instead. If you are ready to step into your power and you’d like a partner in the process, come check out Lumia Life Coach Training. Grounded in science, our ICF accredited program features authentic instructors, a robust curriculum, and business instruction to prepare you for liftoff.