What is Professional Liability Insurance?

Professional liability insurance (sometimes called omissions insurance) covers legal costs incurred by lawsuits over professional errors, omission, and negligence.

Example: You are teaching a parenting course. You provide the participant with documentation of completing the course and a skill improvement report. The parent uses that information in a domestic relation (divorce case) to gain custody of children. Her ex-husband’s parents are upset by the ruling and try to get the parenting course thrown out by discrediting the parent educator.

Also, see below: “Are there additional ways to protect myself?”

Who needs professional liability insurance?

Anyone working in a service field where they provide education or giving advice should carry omissions insurance.

W2 employees: If you are a “W-2 employee”; (employed by the organization as a regular staff person), then you need to find out:

(a) if your employer has professional liability insurance and

(b) if you are automatically covered.

The parenting educator needs to request a copy of the actual policy to see how it is worded. Even with this documentation, there is no guarantee that their employer’s attorneys would represent them vs. fire them in the event of an actual claim, so employees still might want to have their own insurance.

1099 Contractors: If a parenting educator is a consultant who contracts with various sponsors as a “1099 contractor” (independent); he/she definitely needs to have professional liability coverage. Many speaking engagement contracts, especially with schools, require proof of professional liability insurance to enter into a service contract. They are usually not covered by the sponsoring agency’s regular staff insurance.

Are there other types of insurance to consider?

Yes. If you are running your own business, you might also consider the following insurance coverage:

General Liability Insurance – Protects against bodily injury or property damage to third parties. E.g. You bring a parent up to the front of the class for a role play. On the way to the front of the room they trip on someone’s bag and get hurt.

Commercial Property Insurance – Protects against business-owned property and/or equipment that gets damaged or destroyed.

Cyber Liability Insurance – Protects against costs resulting from cyberattacks and data breaches. It also covers legal claims resulting from such breaches. If you store sensitive data in the cloud or on an electronic device (such as private client information and/or notes), you should consider cyber liability insurance.

What is an adequate amount of insurance?

The general recommendation for professional liability is $1,000,000 (per incident) to $3,000,00 (aggregate per year). Speak to your lawyer and insurance broker to ensure you have adequate coverage.

What can I expect the cost to be?

Costs vary based on the educator’s needs. The cost can range from $300-$3,300 per year.

What are some other things I might need to know as I look for insurance?

Get several quotes. While cost can be a factor, make sure you are comparing coverage. Ask if the protection is Occurrence vs Claims-made and know the difference.

Occurrence policies cover incidents that occur while the policy is active, even if the claim is made after the policy is dropped.

Claims-made only covers incidents that occur and are claimed while the policy is active.

For non-bias information about insurance needed in your state, you can contact your State Insurance Commission.

What should I do if I cannot find insurance specific to parent educators?

When looking for insurance, describe the type and scope of your work. Be able to explain the difference between coaching, teaching, consulting, and mentoring and where your work fits in these areas. Be sure to mention you do not do any clinical diagnosis or treatment because that is what most professional liability insurance companies cover or are concerned about. If you do, then you need coverage as a clinician. If you do not, then you are a low insurance risk and don’t need expensive coverage clinicians need, but it may be harder to find someone who will cover you.

Are you working with children or exclusively parents? Also include professional credentials and experience. Your risk may be lower the more training and experience you have.

You and your broker might need to be creative in finding the right insurance policy for you. For example, parent coaches may choose to carry a Life Coach Insurance Policy.

Are there any additional ways to protect myself?

Yes. Align yourself with a professional organization with a Code of Ethics and incorporate that code into your daily work. Partake in ethics training yearly.

Find a mentor or a group of colleagues with whom you can consult if something seems “off.”

It is also wise to have disclaimers and/or liability waivers everywhere: disclaimers on your website, liability waivers on any service contracts (coaching, speaking), etc. Look at what others use in their disclaimers, collect about 3-5 examples, write your own to include key phrases, and have your attorney look at it. The insurance company might also provide some examples.

Use real handwritten signatures whenever possible. People can scan their signed agreements and email. Or use secure digital signatures for online contracts with a statement in the agreement that digital signatures are considered legally binding. (Again, you can find many examples to use as a guide.)

Do you recommend any insurance companies?

No. For non-bias information on insurance, you can contact your State Insurance Commission. 

Here are some insurance companies that surfaced when researching this article. It is important that you do your due diligence in finding the right coverage for you.

Hiscox – Can offer liability insurance to parent educators under “executive coaching.” They specialize in small business insurance.

HPSO – Will cover individuals and small consulting companies.

Professional organizations like NASW can provide individual coverage through their group policies.

Don’t be afraid to shop around as prices can vary significantly.

Resources:

Moriaty, J., (2020) Life Coach Insurance: Coverage, Providers and Cost. Fit Business https://fitsmallbusiness.com/life-coach-insurance/

Association of American Educators
https://www.aaeteachers.org/index.php/member-benefits/liability-insurance