Liability insurance protects you against compensation claims made against you because they believe that they have suffered a loss as a result of something that you have done or failed to do. As well as any compensation awarded, any associated costs and expenses such as legal fees are also covered.
Compensation claims can be expensive to settle. Even a relatively minor injury can cost over £1,000 and a more serious injury such as a broken wrist can cost in the region of £20,000. Serious injuries, such as spinal injuries, often result in final claim settlements that exceed £250,000 by the time all of the costs and expenses are taken into account.
Your liability insurer will also have a fully trained team that can help you handle the claim. This is important because compensation claims often involve complex legal arguments. It also means you don’t have to spend your time dealing with solicitors and can concentrate on running your business.
There are three main types of liability insurance that a psychotherapist needs to consider. These are:
Employer’s liability insurance
This type of liability insurance covers you if one of your employees claims compensation from you.
You’re legally required to have this insurance and make sure that your employees can see your certificate of insurance if you employ anyone, even if you are only employing people on a part-time basis. You are also required to keep copies of these certificates for 40 years. If you fail to comply with these legal obligations, there are heavy penalties.
Employer’s liability insurance policies contain an indemnity limit. This is the maximum that the insurer will pay in the event of a claim. The minimum indemnity limit that you’re legally required to have is £5,000,000 but the indemnity limit in most policies is £10,000,000.
Public liability insurance
This type of insurance covers you if a member of the public claims compensation from you.
Unlike employer’s liability insurance, public liability insurance is not legally required. However, you may be required to have it as a condition of your membership of a professional body.
Public liability insurance only covers you if the compensation claim that has been made against you involves bodily injury, disease, death or property damage. You need to make sure that your public liability insurance includes a financial loss cover extension to ensure that you’re not uninsured in the event that a claim for a purely economic loss is made against you.
The standard indemnity limit is £1,000,000 but if you need to increase that you can do so by paying an additional premium.
Unlike an employer’s liability insurance policy, a public liability insurance policy will contain an excess. This is the amount that you would have to contribute in the event of a claim.
If you’re selling or supplying any product,s you should make sure that your public liability insurance policy includes a products liability section to protect you in the event of a compensation claim being made against you due to a defect in one of those products.
Public liability insurance does not cover compensation claims arising from the delivery of professional services. This includes claims arising from professional negligence, such as giving someone bad advice. As such, you need malpractice insurance to make sure that you are fully protected.
As well as covering bodily injury, disease and death claims, this type of insurance also covers any compensation claims that are made against you that allege that you have caused mental anguish or psychological damage.