Are you on the fence about getting insurance for your life coaching business?
We get it. When you're already dealing with overhead costs or saving up to expand your practice, it can be hard to see insurance as anything other than just another expense.
But what happens if a client decides to sue you? Or you can't host appointments in your office due to a fire or a flood? Or your client data gets stolen from your secure system?
The right insurance coverage will protect against physical damage, cyber attacks, legal fees and more – so you can help your clients tackle all of life's challenges and rest easy knowing your business is protected.
Read on for everything you need to know about insurance for life coaches.
Life coaches need insurance
Life coach insurance is designed to cover the unique risks of the profession, which can include:
- Communication breakdowns: Clients can sometimes misinterpret your coaching advice, vocalize complaints or try to hold you accountable for their ongoing challenges by filing a malpractice lawsuit. They may also take legal action if they mistake your coaching services for therapy or make major life decisions they think you pushed them toward.
- Physical damages: Whether you have a traditional office, an at-home business, or you drive to visit your clients in person, your business' finances could be negatively impacted by car accidents, natural disasters, theft, vandalism and more.
- Unexpected events: There's always a possibility that a client slips and falls at your office or your neighbor's property gets damaged due to a broken pipe at your place. Events like these can leave you on the hook if you're not properly protected.
Types of insurance for life coaches
Now you know how important it is to protect your small business, but how do you pick a policy that's right for you? Here are 3 main types of insurance for life coaches:
- General liability insurance: This type of liability insurance covers third-party bodily injury, advertising injury, or property damage lawsuits. So, if you're sued because someone gets injured at your office, you make false claims or post someone else's content online without permission, or something like a fire or flood in your workplace also damages your neighbour's property, your policy should cover lawyer fees, property damage costs, medical payments and more.
- Professional liability insurance: Also known as Errors and Omissions (E&O) insurance, this type of coverage protects against immaterial damages that result from breaches of confidential information or a misunderstanding, like misinterpreted advice. Since your profession requires you to handle sensitive information, provide personal guidance, and support clients through challenging transitions, this type of insurance is particularly important to cover you in the event someone feels misled by your coaching services.
- Commercial property insurance: This type of coverage is all about protecting your business' physical property, including the cost to repair or replace your office space, expensive equipment, inventory, and furniture if they're damaged by fire, smoke, windstorms, hailstorms, vandalism and more. Many coaches think they can skip this coverage if they run a home-based business – but typical home insurance policies won't cover damage caused by business-related activities or equipment related to your business, like laptops and other expensive tech. If you're operating from your home, speak to your licensed insurance advisor about adding an endorsement to your home insurance policy to keep yourself covered.
Once you have the basics covered, you may want to consider additional protection for your life coaching business. A few common options include:
- Cyber liability insurance: While it may seem far-fetched for your small life coaching business, you’re still susceptible to cyber-attacks – even if you use secure systems to store your data. Cyber liability coverage (also known as “data breach insurance”) can help pay for costs to notify your clients, recover lost or stolen data, or repair your computer system if you’re hacked. It can also help cover the cost of any lawsuits stemming from cyber incidents and lost income if your business has to halt due to a breach.
- Commercial auto insurance: If you drive to your clients’ homes for life coaching sessions, you’re using your vehicle for business purposes – which means your personal auto insurance policy may not cover you if you’re in an accident while on route to a work meeting. Commercial auto insurance functions much the same as a personal auto policy, but it extends coverage to times when you’re using your car for business purposes, too. Talk to your insurance company to determine if you need commercial auto insurance to ensure you’re covered anytime you’re on the road.
- Commercial umbrella insurance: This type of policy is designed to bolster your other general liability, professional liability or commercial auto liability coverage. If you’re sued and your legal costs exceed your other policy limits, this coverage will kick in to ensure you stay covered.
- Worker compensation insurance: If your small business has employees, you need worker compensation coverage so your team members can file a claim to have their medical bills, other medical expenses and lost wages covered if they get injured on the job or are diagnosed with a work-related illness.
Business Owner's Policy (BOP)
When shopping around for insurance, you'll likely also come across something called a Business Owner's Policy (BOP), which combines multiple types of coverage to offer you broader protection in a single policy. In most cases, BOPs combine commercial property insurance, general liability insurance, and business interruption insurance, so you're covered against most lawsuits, property damage, and lost income or additional costs your business incurs if you're forced to close temporarily due to damage. You can also usually add additional elements – like cyber liability, professional liability, commercial auto insurance and more.
Life coach liability insurance
Much like a BOP, some providers will also offer liability insurance for coaches (also known as life coach business insurance, life coach professional liability insurance or coaching liability insurance) alongside coverage for your space and furnishings. In some cases, this type of policy is the equivalent of basic professional liability insurance and, in others, it combines professional liability insurance with commercial property coverage – so just be sure to review all the details before you commit so you know exactly what you're insured against and what you may need to add separately.
Finding life coach insurance that's right for you
When searching for an insurance policy, the key is to focus on the specific risks your small business faces. If you only offer virtual services and don’t have an office or use your vehicle for work, for example, you might spend more on cyber liability insurance, less on general liability insurance and skip commercial auto insurance altogether. Be sure to get quotes from different providers too, since prices can vary depending on each company's specific risk calculation.
If you're looking for a policy tailored to life coaches, check out these options:
- Hiscox: This provider's life coaching insurance plan covers professional and general liability. Plus, they also offer a business owner’s policy (BOP), and you can discuss your business' unique needs directly with a licensed advisor before choosing a policy.
- Progressive: This insurance company's life coach policy includes professional and general liability and you can add a BOP or commercial auto policy, too.
- Alternative Balance: This provider's life coach policy covers general liability, defense costs, damage to rented premises, and advertising and personal injury. Plus, they also offer a cyber liability option.
- CPH: This insurance company's life coaching policy includes professional liability, defense costs, deposition expenses, and state licensing board defense coverage. Plus, it's easy to get a quote online.
The importance of a good coaching contract
Insurance is an essential way to protect your life coaching business, but so is a well-written contract. When drawing up yours, be sure to include:
- Payment terms: To prevent future price disagreements, outline the total number of sessions a client is agreeing to, your total fee breakdown, and your full payment terms. You may also want to consider offering clients flexible package payment plans.
- Service overview: List what each session will entail and be as detailed as possible just in case there's a dispute about what your services should have included or how your advice was interpreted. Also be sure to clearly state that you’re not providing medical, nutritional, or mental health advice.
- Expectations for communication: Include details about when and how people can contact you and set clear guidelines for canceling sessions or services. Not sure where to start? Use this guide to successfully communicate with your clients.
Prioritizing peace of mind
The right life coaching insurance will help you build your business with confidence – and so will the right CRM tool. That's why we created Practice – a streamlined client management system that allows you to handle your forms, contracts, scheduling, payments, files, and client communications – all in one simple and reliable spot. Take this quiz to see how Practice can help you manage your client-based business today.
