Every business faces the risk of a compensation claim being made against them. For this you need counselling insurance. If you find yourself in this situation, there are two problems.
First, you will need to pay any compensation awarded. In addition, you may need to pay any of the claimant’s associated costs and expenses, as well as any earnings that they lost because they were unable to work.
Second, you will need to deal with solicitors and potentially complex legal arguments. There will also be the legal fees that both you and the claimant have incurred in dealing with the claim.
Liability insurance covers compensation claims, paying the compensation awarded as well as all of the other costs. Your liability insurer will also help you deal with and compensation claims that are made against you.
The problem is that standard liability insurance does not cover claims which arise out of professional negligence.
Covering professional negligence
Insurance to cover you against compensation claims arising from professional negligence is called a number of things. Sometimes it’s called professional indemnity insurance. It’s also called errors and omissions insurance. Generally, the insurance that counsellors buy to protect them against compensation claims arising from professional negligence is called medical malpractice insurance.
This type of insurance covers you if someone suffers from a loss because the advice or counselling that you provided was wrong. Like standard liability insurance, as well as paying any compensation awarded against you, it also pays any associated costs and expenses as well as both sides’ legal fees. Your medical malpractice insurer will also handle any compensation claims made against you so you wouldn’t have to worry about dealing with solicitors.
An important thing to remember about medical malpractice insurance is that it is usually on a “claims made” basis. This means that, unlike most other types of insurance where it’s the policy that’s in force at the time of the incident leading to the loss that deals with the claim, in the event of a medical malpractice claim being made against you it’s the policy in force at the time that the claim was made that deals with the claim, even if the incident leading to the claim happened earlier.
Some claims can come in several years after the incident leading to the claim took place. This means that even if you stop working as a counsellor, you should still maintain a medical malpractice policy in case compensation claims for professional negligence are made against you for things that you did while you were practising. Often your medical malpractice insurer will offer to provide what’s called “run-off” cover which protects you for any claims that come in once you’ve ceased trading for a one-off fee.
Public liability insurance
Although for most counsellors the main risks is that the advice or counselling that they have given will lead to a compensation claim being made against them, there’s still the very real risk that something they do or fail to do will result in a compensation claim.
Someone could trip over your laptop cable and injure themselves, for instance. If that led to a broken wrist, the compensation claim could easily cost £20,000 to settle. More serious injuries can result in compensation claims which cost over ten times that amount. There are also the associated costs and legal bills to pay which can increase the final cost of any compensation claim.
This type of compensation claim would not be covered by medical malpractice insurance, so although counsellors need medical malpractice insurance to protect them against compensation claims due to allegations of professional negligence, you should not view it as a substitute for public liability insurance, and you’ll need that type of insurance as well.