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Professional Indemnity Insurance for Life Coaches

Written by

Shaun McGowan

People turn to Life Coaches for help, guidance, training or support in their personal, family or professional lives. They engage you as a professional to help them get results they feel they won’t be able to achieve on their own. They may be seeking emotional support and motivation, practical advice and strategies, help understanding aspects of their personality or situation – or a combination of these and other services.

As a Life Coach you may find yourself working with vulnerable clients who are relying on your advice to help them overcome significant challenges in their lives. It is likely that your clients will make important life decisions based on what they learn from you. Crucially, it is very hard to pinpoint the results of the services you to provide to them, so if they are not happy with the outcomes or do not achieve their goals they could place the blame on you, whether or not this is fair or reasonable.

Life Coaches offer a wide range of services, from mentoring and motivation to designing practical programs that help clients achieve specific goals. If your client believes that you have not delivered the expected results they could claim that:

  • You gave them inappropriate, irrelevant or unactionable advice
  • You failed to deliver the promised results
  • You damaged their self esteem
  • Following your advice made their situation worse or led to financial loss

As a Life Coach it is likely that you will have access to some deeply personal information about your clients, which you have a duty to keep confidential. If you were to disclose that information to a third party and breach the privacy of one of your patients, even by accident, they could take legal action against you.

Why do Life Coaches need professional indemnity insurance?

If you’re in business as a Life Coach, it’s really important that you protect yourself with professional indemnity insurance (PII). These are some of the reasons why:

  • There might be many reasons why your clients don’t achieve their goals despite your support and advice. However, it is extremely difficult to calculate what impact your services have had and what might have happened without your involvement. So if something goes wrong, or your clients do not see the results they were hoping for, they may hold you responsible and seek to recover their losses from you.
  • Your entire business is based on your reputation, and that reputation is always at stake. If a client makes a negligence claim against you, even if it is unfounded, you will need to mount what could be an extremely costly legal defence to protect yourself.
  • Your clients trust you with personal information about themselves, which they may not have shared with anyone else. If someone were to gain access to a client’s private records – for example if you accidentally left your laptop or a file in a public place, or your system was hacked – you could be sued for breach of confidentiality.
  • If a client sues you for professional negligence you could lose your personal assets, such as your house, as well as any business assets.

What does professional indemnity insurance cover?

You may already have public liability insurance to cover you if you accidentally hurt someone else or cause damage to their property (for example if a client had an accident on your premises). But public liability insurance won’t protect you against claims of professional negligence. If one of your clients claims they have suffered a financial loss as a result of something you have done or said, you will need professional indemnity insurance.

Your professional indemnity insurance policy covers your legal costs if you need to defend yourself against a negligence claim, even if that claim is not upheld. And if a claim is substantiated PII also protects you for any damages that are awarded against you, up to your policy limit.

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How much is professional indemnity insurance for Life Coaches?

How much you pay for your professional indemnity insurance will depend on on a number of factors, such as:

  • How much you earn in professional fees each year
  • How much insurance cover you want to take out
  • Where you work (the level of stamp duty varies in different states)
  • Whether you have made a claim under PII insurance before

If you want to improve your level of protection by adding features like retroactive protection, runoff cover and automatic reinstatements, your PII premium will be higher.

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Professional indemnity insurance case study

A Life Coach was engaged to help a client launch a new business and overcome her fears around public speaking. The client considered herself to be shy and was extremely anxious about the networking and marketing aspects of her work.

The Life Coach provided motivation, advice and support services to help her client overcome the shyness. She also helped the client identify her business goals and devise a clear, actionable strategy to launch and market the business.

Although the client gained self-confidence and made considerable progress with her ability to speak in public, she felt that the process was too slow and that the Life Coach did not really deliver the outcomes she had promised. The client’s business did not take off, despite some success with the marketing strategies, and after 18 months she was financially unable to sustain it and had to wind it up.

The client blamed the Life Coach for the failure of her business, and decided to sue her to recover the entire cost of her coaching services during the previous 18 months. She made claims against the Life Coach of professional negligence and false advertising, and demanded compensation for her failure to deliver the promised services.

The courts dismissed the negligence claim, since the Life Coach was able to prove that she had provided all the services for which she had been engaged. There were many factors contributing to the failure of her client’s business, and it was not possible to calculate what impact her advice may have had. However, the Life Coach incurred legal costs of $31,000 in defending the claim and protecting her reputation. These costs were covered by her PII policy, on which she only paid an excess of [Sxx].

List of Life Coaching services that need professional indemnity insurance

If you planning to offer support or advice as a Life Coach in any of the following areas it’s vital that you protect your personal and business assets, and your valuable reputation, with adequate professional indemnity insurance.

  • Action planning
  • Business planning and strategy
  • Career planning and development
  • Communication
  • Decision making
  • Finances and budgeting
  • Goal setting
  • Identifying values and passions
  • Life transition
  • Motivation and time management
  • Organisation
  • Practical advice and techniques
  • Personal growth
  • Personality testing
  • Relationships
  • Self care
  • Self esteem
  • Stress management
  • Work / life balance

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About the Author

Shaun McGowan from money.com.au

Shaun

McGowan

Shaun McGowan

Shaun is the founder of Money.com.au and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded CarLoans.com.au and Lend.

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