$2M Professional Liability (E&O) Insurance for Business and Executive Coaches

A $2M Professional Liability (E&O) requirement for business and executive coaches usually means $2M per claim and $2M total for the year, so a $1M/$2M policy may not meet it.

What does a $2M requirement mean for business and executive coaches?

Professional Liability (E&O, short for Errors and Omissions) covers claims that your coaching, advice or services caused a client a financial loss. In an enterprise coaching agreement, the clause often reads like this:

• Check the certificate: make sure it shows $2M per claim, not only the $2M yearly total (the aggregate).
• Claims-made: Professional Liability almost always covers claims made and reported while the policy is active, for work on or after the retroactive date (the earliest date of work the policy covers).
• Assessments count: if you run 360 reviews or personality assessments, make sure the policy names those services.

See Professional Liability limits explained.

Who asks business and executive coaches for $2M?

Smaller clients usually ask for $1M, or nothing. $2M tends to show up when the client is large or the program covers many leaders:

• Large employers whose procurement teams send a standard vendor agreement or master services agreement (MSA).
• Leadership development firms that subcontract coaches and pass their own client's limits down to you.
• Hospital systems and health plans hiring coaches for physician leaders and senior staff.
• Banks, insurers and other financial firms, which may have detailed vendor insurance rules.

Very large programs may ask for $3M.

How is $2M built?

Many coaches buy a Miscellaneous Professional Liability form, a general form for service businesses that do not have a policy type of their own. It is often packaged with General Liability, which covers injuries such as a fall at a retreat, so check the Professional Liability limit on its own.

In many cases, $2M is one primary policy (the policy that pays first) written at $2M/$2M. Licensed psychologists giving clinical care usually need malpractice coverage instead.

Another option is a $1M primary policy plus a $1M excess layer, a second policy that pays after the first limit is used up. The excess should follow form, meaning it adopts the primary policy's terms and retroactive date. Confirm with the client that primary plus follow-form excess meets the clause. A commercial umbrella almost never covers Professional Liability.

What will underwriters ask for?

An underwriter is the person at the insurer who decides whether to offer coverage and on what terms. For $2M, expect questions like these:

• Your services and the share of revenue from each: executive, team and business coaching, workshops and facilitation.
• Whether you advise on finance or hiring, and whether anyone holds a license such as CPA or psychologist.
• Which assessments you use, who is certified to give them, and how you store and share results.
• Your coaching agreement: clear scope, confidentiality terms, a statement that coaching is not therapy, and no promised results such as promotions.
• Any subcontracted coaches and whether they carry their own coverage.
• Your revenue, largest clients and their industries, prior claims, and current policy with its retroactive date.

What affects the cost?

• Advice versus process. Advice on finance, legal or HR topics can raise the price, and some policies exclude or limit it, so ask exactly what the form covers.
• Client size and industry. Large or regulated clients, such as banks, mean bigger possible claims.
• Team size. A firm with several coaches usually costs more than a solo coach.
• Limits and structure. A higher per claim limit usually costs more. Prior claims can raise the price or narrow options.
• Retention and terms. Retention is the amount you pay per claim before the policy pays, similar to a deductible. A higher one usually lowers premium. Defense outside the limit usually costs more.

Frequently asked questions

Is $1M/$2M enough if my coaching contract says $2M?

Usually not, because $1M/$2M pays only $1M on one claim.

I carry $1M as a coach. How do I get to $2M?

Request new quotes for a $2M policy through Morrow, either a new $2M primary policy or an excess layer above your $1M. Morrow can ask insurers to keep your retroactive date, which may help work you did in past years stay covered (this is called prior acts coverage), where the market allows (see retroactive dates). Report anything that could become a claim to your current carrier before you switch.

Can the company be added as an additional insured?

Usually not on Professional Liability, though availability varies by carrier. Where allowed, it usually covers only the client's liability arising from your services. A General Liability additional insured status will not cover claims about your coaching advice. Some clients may accept a certificate of insurance instead. Check what your contract requires.

I coach through a leadership development firm. Does its policy cover me?

Often not. Many firms require each subcontracted coach to carry their own Professional Liability. The firm's policy may protect the firm, not you.

This article is general information, not legal advice or a coverage determination. Coverage depends on the actual policy wording, carrier underwriting and your contract terms.