Like any other small business owner, you as an independent life coach must safeguard your enterprise from unforeseen risks and monetary losses. You recognize the value of peace of mind, and you want to be able to fully focus on providing high-quality service to your clients without worrying about client claims and legal ramifications.
Whether you're looking to switch your insurance policy to something more suitable for your company, or are first hearing about the need for insurance as a life coach, this article will help you make the right decision. We will go over some of the most common liability insurance plans that you can use in your coaching business. But before we list your options, let's quickly go over why you even need insurance in the first place.
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As a life coach, you offer valuable guidance and professional advice to your clients. While you are not accountable for how that advice is actually used or carried out, you do run the risk being sued by unhappy clients. It can happen to the most experienced life coach. Although liability insurance is not legally required for life coaching businesses, running your company without any type of legal protection can be exceedingly dangerous. If you get sued, you may have to pay hundreds of thousands of dollars in costs (or more).
The only way to stop this kind of incident from ruining your company is to have adequate liability insurance coverage in place to help cover these costs. Additionally, you may also require insurance to secure your assets (such as your office, laptop, or vehicle used for business), pay for any mishaps that may occur where you conduct sessions, and safeguard client information.
Now, let's take a look at the most common types of liability insurance that you might want to invest in depending on your business needs.
Recommended reading: Read more about the benefits of incorporating to protect your assets.
No life coaching business is the same. So the ideal liability insurance depends on your unique needs. Life coaches who work from home or do in-home visits will need a different type of coverage than those doing only online meetings. The same goes for those who have employees vs solo professionals. So take a look at some of the options you have and decide which one(s) best fit your needs.
The most common and complete type of policy for business owners is general liability insurance. This policy covers the costs of clients' medical bills or replacing any damaged property. It's crucial to invest in this fundamental insurance because accidents can occur anywhere, including at your workplace or a client's house. Some of the hazards covered by this policy include bodily injury, property damage claims, medical costs, and legal representation.
If a client is hurt on your property (for example they trip and fall on the entrance steps) or if you accidentally cause damage to the client's property while conducting an in-home session, you as a professional service provider may be held liable in court. Your legal expenses in third-party claims for physical injury or property damage are covered by general liability insurance.
A professional liability insurance policy protects you against lawsuits that clients may bring if they believe you provided inaccurate or faulty advice, which might have made a negative impact in their personal life or business. It is also known as errors and omissions insurance or indemnity insurance. Life coaches may face legal action not only for giving 'bad advice', but also for violating a confidentiality agreement, and even engaging in sexual harassment (especially during in-home sessions where there's close contact with a client).
Even if the claims against you are untrue, you still need to reply to them and consult a lawyer to defend your business. This is where the professional liability insurance comes in to cover the legal defense costs as well as any settlement or harm that may arise in your case.
Since many life coaches work from home, insurance for home-based businesses is a great way to go. This insurance fills in the gaps left by homeowner's insurance policies, which usually exclude incidents involving commercial activity. A business owner's policy (BOP) combines general liability insurance with commercial property insurance and it is frequently less expensive than buying separate policies.
The addition of commercial property insurance in this bundle covers business-owned structures and contents such as your workspace, furniture, computers, and any other specialized tools you use for your coaching business. The majority of commercial property insurance policies cover harm from pipe bursts, vandalism, hail, and theft.
Life coaching sessions involve a wide range of personal subjects that might have an impact on someone's reputation, particularly if you're dealing with clients who are more well-known to the public or who are brand ambassadors for major companies. In these cases, you may run the risk of someone gaining access to private, confidential information about your clients by hacking into your computer.
A cyber liability insurance will shield you from malware or phishing and cover the costs associated with data breaches or cyberattacks. Additionally, it will pay for the expense of customer litigation in the event that their private information is compromised. This coverage may also be offered as an endorsement to a BOP (Business Owner's Policy).
Regardless of whether a car is classified as a personal or commercial vehicle, if you use it for work-related driving, you should have some type of commercial auto insurance. If you drive your car for business meetings or occasionally pick up clients for their coaching sessions, this insurance will protect you in case of an accident on the job. Most personal auto policies do not cover incidentals on business-related driving.
Finally, if you own a life coaching business and have employees, a workers compensation insurance will shield both your employees and your company from any accidents, illnesses, or even fatalities related to the job. Even if you just have one employee, you still need insurance to cover medical expenses and lost pay. In the majority of US states and numerous other nations, you are obligated by law to offer your team members health insurance and paid time off for illness.
The price you pay for a life coach insurance policy will depend on several factors which include your location, risk level and claims history. Other reasons why your insurance coverage costs might increase are if you have a higher number of employees or if you provide health and wellness coaching services as well as career advice.
On average, a typical BOP insurance (the most common and affordable option) will cost between $350 to $1000, and professional liability insurance as well as cyber liability can cost up to $2000 annually. A commercial property insurance alone can cost you up to $5,000 depending on how large your practice space is and how much business-related equipment you own. Remember you can claim tax deduction on most of these insurance premiums, so make sure to add these expenses to your business accounting records.
Aside from life coach insurance coverage, a great way to stay legally protected is by incorporating a well-written, life coaching contract that clearly outlines responsibilities and expectations for all parties involved. To help you quickly draft a professional and comprehensive contract, Bonsai offers you a high-quality free life coaching contract template which you can fully customize to fit your business and client's needs.
All of our templates have been legally reviewed by top lawyers and thousands of independent professionals in the coaching industry. Plus, Bonsai helps you easily follow up on the contracts by sending you automatic notifications when your clients receive and sign the document. We integrate a legally-binding online signature to streamline all the formalities so you can get started with your coaching program as soon as possible.
But there's more... We have the ultimate all-in-one product suite with administrative tools especially designed for small business owners and start-ups. From proposal drafting, to invoicing, accounting, taxes and even your own small business checking account, Bonsai really does have everything you need to take your coaching business to the next level. Start your 14-day free trial now and see for yourself!