Private Investigator Insurance
(Finding the right liability coverage)
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Private investigators perform a variety of functions for companies or individuals in the areas of information gathering and security. They also do work for attorneys, insurance companies and public agencies.
All this activity requires private investigator liability insurance for the individual or the firm involved.
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Read on for more information about PI coverage.
Private Investigator Overview
- There are about 34,700 private investigators in the U.S.
- Almost all states require a license to act as a private investigator.
- PIs cannot legally access:
- Banking information and financial records
- Telephone records
- Criminal records
- Using "pretexting" (pretending to be someone you are not, such as a law enforcement official) to gain access to information is illegal in the U.S.
- A number of risky methods of gathering information that are popular in movies can get a private investigator in trouble, either with law enforcement or with an individual who files a personal injury lawsuit.
Functions of a Private Investigator
Private investigators work in a surprisingly large number of areas. Here are some of the functions performed by private investigators:
- Corporate executive and celebrity protection
- Pre-employment verification
- Background checks
- Computer crimes
- Computer forensics
- Legal work, such as building cases for attorneys
- Insurance claims investigation
- Investigating fraud and employee dishonesty
- Missing persons
- Pre-marital screening
- Investigating alleged infidelity
- Skip trace work
- Shoplifting surveillance
- Hotel security
Private Investigators Insurance Options
The right insurance for private investigators will vary from one business to another. If you are a PI, you may need a number of different insurance policies to completely cover your risks. For starters, most PIs require the same general types of insurance as any business:
- General liability: Covers your risk of bodily injury or property damage to another person or business in the course of doing business.
- Property coverage: If you own your building, you may need this coverage to protect your business property.
- Auto liability: Commercial vehicle insurance will protect you whether you drive a business vehicle or drive a personal auto for business.
- Workers' compensation: You may be required to carry this coverage, whether or not you have employees. It provides protection against job-related injury or illness suffered by you or one of your employees. Laws vary by state.
In addition, depending on the type of work you do and whether you hire employees, you may need a number of specialized coverages, such as:
- Assault and battery coverage: Protects you if you are accused of physically harming another person.
- Professional liability: Also known as "errors and omissions" coverage, this policy covers you for professional errors or negligence, such as neglecting to provide critical information that results in a loss for your client.
- Invasion of privacy coverage: Claims of "invasion of privacy" are a definite professional risk for private investigators.
- Fidelity bonds: This coverage protects you against the deeds of unscrupulous employees.
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Professional Liability for Private Investigators
A great deal of the work done by private investigators involves researching information or developing data that will be used by others to make significant decisions, such as choices regarding hiring or firing, marriage, contracts, or whether or not to do business with another party.
As a private investigator, you may find yourself responsible for a financial loss by another person or business in a number of ways. For example, you may face this risk if:
- You do an inadequate job of researching a given situation;
- You provide information that results in a poor decision by a client;
- You neglect to provide critical information that results in a client's choice of a contractor, who then does not perform quality work.
These situations will not be covered by a general liability policy because there is no bodily injury or property damage involved. Only a professional liability policy will protect you in this situation.
"Errors and omissions" or "E & O" risks are inherent in any business that provides consulting services or provides information and advice, and this is particularly true of PIs.
Professional liability for private investigators may be one of the most important coverages you can buy to protect yourself against liability risks.
Assault and Battery Coverage
Some private investigator work can involve situations where physical confrontation may be necessary. For example, you may face this risk if you are involved in any of the following:
- Executive and celebrity protection
- Retail store security
- Hotel security
- Investigating domestic issues
In order to get the proper protection, you will need for your insurance company to amend or waive the assault and battery exclusion in a standard general liability policy. Only a company specializing in private investigator liability insurance will consider taking this step.
Care, Custody and Control Situations
Some of the work done by private investigators involves guarding or securing property. For example, a department store might hire you as a PI if it is experiencing substantial inventory shortages and suspects that some of its employees are to blame.
As the private investigator hired to look into the situation, you would have access to the entire store. A difficult insurance situation can arise if you inadvertently cause damage to some of the store's property while looking for evidence.
A standard general liability policy excludes liability for property in the "care, custody or control" of the insured. Your insurance carrier could well exert this exclusion in this scenario.
The solution is to work with your insurance agent to create an amendment to the basic policy, providing a sub-limit for property damage otherwise excluded by the care, custody and control provision.
This is highly technical work and you need a knowledgeable agent who specializes in commercial coverage to help you through this and other concerns pertaining to private investigator insurance coverage.
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Comparing Private Investigator Insurance Quotes
As a private investigator, you may be called upon to perform a wide range of services, many of them involving potential exposure to legal action if you make a mistake, or do not complete an agreed-upon duty as expected. Only a well-designed insurance program will offer you the protection you need.
Research the costs and the options before you buy. It's important to get a few quotes first, and consider what risks and liabilities you face in your line of work. Consulting with a lawyer, financial planner, and an insurance agent can give you some clear direction on the kinds of coverage you need to stay protected.