Is your practice covered by insurance? Chances are, you may never have felt the need. But as the industry becomes more established, legal cases may well arise. Varya Shaw examines the types of cover already available.
What would you do if your client was unhappy with your advice and refused to pay? Or if a slip of the finger led you to post sensitive information about a client on the internet, and you were sued for breach of confidentiality? Or if you faced a disciplinary hearing from your professional body?
These are some of the scenarios covered by professional liability insurance for coaches. This type of insurance is a mix of public liability and professional indemnity insurance. The former covers situations such as where a client trips over something you have left on the floor in your office, breaks their leg and sues. The latter covers situations such as where you are accused of breaching your professional duty or an act of professional negligence.
Why the need?
How important is such insurance for coaches? When coaching first started out as a profession, legal action against coaches was unheard of and there were few insurance products on the market. The earliest products offered cover in the tens of thousands. While coaching is still not a particularly litigious area compared to other professions, the financial stakes have changed. Today, cover typically starts at £1m and goes up to £5m.
What kind of claims do coaches face? Take two real situations recounted by Steve Johnson of Oxygen Insurance.
One coach was hired to facilitate a training day for a group of executives from a company with branches around the country. All the executives booked accommodation, transport, days off work, and then gathered for the event. Unfortunately the coach had put the wrong date in her diary and failed to turn up. The expense was considerable, but luckily her insurance covered it.
Another coach ran a workshop on self-confidence. To demonstrate that you can achieve anything if you believe it is possible, the coach asked participants to break a block of wood with a karate chop. The demonstration had worked well in a number of workshops, but one participant did not follow instructions and ended up with a bruised hand. This developed into chronic pain syndrome, which led to the person taking early retirement. A claim was made for loss of earnings and pension contributions, plus the cost of help around the house, which came to around £150,000. Again, the claim was covered by insurance.
Protect your practice
Professor Stephen Palmer, director of the Centre for Coaching, London, and who has been involved with most of the leading professional coaching bodies over the years, says: “To my knowledge, there aren’t many claims, but I do know of people who have had claims against them and have needed their insurance. I’ve sat on disciplinary boards, as members of the public do make complaints to professional bodies – for that member it’s very important they have prompt access to legal advice.
“I needed to use my insurance once because I was a witness in a court case for one of my clients, and the court wanted to use all my paperwork and to listen to some recordings of my supervision as well. As far as I was concerned, there was a confidentiality issue and it was very reassuring to have insurance cover and to get advice from a legal department – they responded very quickly too.”
Johnson adds: “Insurance is important for any professional who is working for clients in a situation where they might be giving advice or guidance. They need protection in case something goes wrong with that work, or if there are allegations that something went wrong – even spurious allegations still need to be defended.”
Gladeana McMahon, chair of the Association for Coaching (AC) UK, says: “If you are a coach you would be negligent if you didn’t have your own insurance. You don’t know what’s going to happen. Even if someone is making a spurious claim, the fact is they can take out the case. You’re still going to face costs – contracting a solicitor, going to court. Even if the case is thrown out, you’ve still got the worry,
the time off work, getting evidence together, concern about your reputation.”
Although it is not illegal to practise coaching without insurance, coaching associations strongly recommend having it. An International Coach Federation (ICF) spokesperson says: “ICF urges all its members to have an appropriate amount of professional liability insurance to protect you and your practice.”
There is even stronger direction from the Special Group in Coaching Psychology division of the British Psychological Society (BPS). Committee member Claire Townsend says: “The guidance from the BPS says it is essential for all psychologists in independent practice to take out independent insurance – indeed they have a duty to do so.”
How great is the risk that the insurance protects against? Currently, claims and complaints against coaches are few and far between. Legal action is so rare that there are no statistics. Indeed, the AC says it has dealt with just 50 complaints in the 10 years since it was set up, while the BPS has received no complaints at all about coaching psychologists. But this low level of activity may not last.
McMahon says: “You can ask yourself, ‘is it worth having insurance if there are so few claims?’ But if you look at the evidence, it will happen because it always does. Look at counsellors – they’ve been established for such a long time that there are a lot of cases that have come up over the years. It’s much easier to talk about what counsellors can be taken to court for. As with counsellors, the longer coaching is around as a profession, the more things will come up.”
She adds that the US offers a clue about the future of UK coaches. “In America, there’s a growing body [of litigation], and what happens in the States happens here. Things like, someone has gone for coaching to someone who is a coach and a therapist, and felt their coach was therapising them, and took them to court because that wasn’t what they wanted. Or they felt the coach wasn’t competent and made their life worse, rather than better. Also, abuse of power – inappropriate relationships
with clients.”
The premiums
How are premiums calculated? By the insurer’s “depth of experience” according to Johnson. He explains: “If claims were more frequent and coaching were a bigger profession, we could build up some statistical justification for the pricing.”
What is clear is that because historically there have been so few claims against coaches, premiums for individual practitioners are not particularly eye-watering. Oxygen quotes £81 a year for civil liability cover of up to £1.5m, £94 for up to £3m and £133 for up to £5m.
All levels cover complaints and disciplinary hearings, legal costs and loss of documents. They apply while working temporarily anywhere else in the world. The cover also makes good unpaid fees from dissatisfied clients, which can head off a dispute that could otherwise escalate into a legal battle.
Most insurers offer a range of indemnity limits. Towergate offers cover of £1m, £2m or £5m. For many coaches, a lower level of cover is perfectly adequate. Cover of £5m is recommended for coaches working with the wealthiest, most high-profile clients – celebrities and top sports people. If a client like this were to sue for loss of earnings due to poor advice or negligence, the cost could be astronomical.
Why so pricey?
What makes insurance costs soar? Individual coaches have known premiums to rise exponentially when they come together to form a company. But this does not happen with all insurance providers – Johnson says Oxygen would not charge more in this scenario. Another situation that can make insurance costly is if a big corporate client requires a higher level of cover than is usual for coaches – say £10m – because that is its standard requirement of suppliers.
This poses a dilemma for coaches, but it is worth trying to explain to the client that although this level of cover may be appropriate for its other suppliers, it is not the norm for coaching.
How does insurance for coaches compare to insurance for therapists right now? As noted earlier, coaches are less likely to face claims than therapists. This may also be because of the nature of their clients – therapists will more frequently deal with vulnerable or disturbed people.
Unfortunately, this does not mean coaching insurance is cheaper. If a coach does face a claim, it is likely to be more expensive. Coaches often work with senior, well-off clients who can afford to go to court. Therefore, therapists and coaches end up paying very similar rates for insurance.
Nor do premiums go down as coaches get more experienced or qualified. Intriguingly, the more experienced a coach is, the more likely they are to face a claim. This could be because they are busier and have more exposure to clients, because they take on more challenging cases, or because clients have higher expectations of the most experienced coaches.
However, there is usually a reduction in fees once a coach joins a professional membership organisation. The AC recommends four insurers – Towergate Professional Risk, Oxygen, Howden Professionals and Westminster Indemnity – and each offers a preferential rate for members. The ICF has a preferential pricing deal with Westminster Indemnity.
Insurance may not be a legal requirement for coaches. But like any form of insurance, it guarantees peace of mind. It means that if the worst happens you have the help you need. There is really no excuse to be without it.
Coaching at Work, volume 8, issue 2