Your insurance premium is the cost you pay for obtaining insurance cover. Insurance premiums are calculated by looking at the kind of risks your business poses, and the amount of insurance cover that you want. So, in any type of business, is insurance enough to protect you?
Protect you from what? Just as there is no justice in the legal system there is no sure fire way of protecting yourself from every possible outcome in a business. It’s a risk assessment exercise, starting with identifying the risks.
Lets use a personal development (coaching) business as an example.
In a personal development business you are asking people to pay you money without any guarantee of results. The reason that you can’t guarantee results is because personal development is just that, personal! You can work with someone with all the best intentions in the world, and still they will resist and look for excuses and avoid doing what you might be advising is best for them. So, lets consider some of the risks:
1. Not happy, they want their money back.
Insurance is not going to protect you in this situation.
What you need to do is be very very clear and the start of the relationship what it is that you are providing. As an example, if you use a set monthly fee, paid in advance, and that fee entitles the client to a certain amount of time with you, be clear what is going to be included in that time and what happens if they fail to show up.
Be clear that the fee is for your time, not their results and that results will vary based upon the actions they take.
Have something in writing that your client needs to sign before they pay, so that they understand what they are paying for and what you will do in exchange for that payment.
Never promise what you can't deliver. Be mindful of who you chose to work with and be prepared to repay monies. Ultimately it will be a learning experience for you and of greater value to your business to investigate and learn from the complaint and move on.
"Never promise what you can't deliver"
Where services are provided to support a business, then you can include a limitation of liability in your terms of service to the cost of providing the service again. This does not apply to services provided for personal use and is a limitation that is available under fair trading legislation. It is worth considering this type of limitation if you are dealing with people in business so that they cannot make a claim against you for consequential loses in their business.
2. Your client does something stupid and you get the blame.
I may have stated that a little flippantly, but you really have no control over the actions of another person and it is possible that could end up on the receiving end of a complaint resulting from your work with the client. I am aware of a number of investigations into personal development companies where people have actually committed suicide after attending a course.
It does not mean that the company did anything wrong, it could mean that the person was unstable and the environment was not suitable for them and they never should have been there in the first place. Unfortunately you can only work with what you know, so asking if someone has mental health problems or has ever or is receiving treatment for mental health concerns is a good question to ask before you start working with someone.
"Be mindful of who you chose to work with"
Some form of professional indemnity insurance may assist you in these circumstances. Be clear on the terms of your insurance policy and what it covers and what kind of evidence they will require from you in the event of a claim.
You should keep notes of your sessions with each client including what you covered, any particular exercises you recommended, your impression of their responses and any improvements to your practice that you feel you could have made. Records like this can assist you in demonstrating what you have done without having to rely on memory alone.
3. Injury in your premises
If you are going to run a business from home or any premises, you might consider getting public liability cover so that a claim from anyone tripping over a bump in the carpet and losing a tooth on the door frame will be covered.
For more details about the type of insurances suitable for your business, seek the services of a professional insurance broker in your industry. Professional industry bodies (for coaches, consultants etc) are the best places to start as they generally have established relationships with insurance providers who already have an understanding of the nature of your business.