Private investigators (PIs) provide investigative law services to individuals, attorneys, corporations, or organizations. Once retained, PIs may try to locate missing people or gather evidence for legal or personal matters.
Clients often choose private investigators because of their specific skill set and how discreet and efficient PIs can be. But what happens if something goes wrong? That’s where private investigator liability insurance comes in.
Why Do Private Investigators Need Professional Liability Insurance?
Private investigators can turn to professional liability insurance for:
- Protection against legal claims: If a client or third party files a lawsuit alleging negligence, errors, or omissions on the part of the private investigator, liability insurance may cover the costs. For instance, liability insurance may cover expenses or settlements if someone accuses a private investigator of invading their privacy during surveillance.
- Professional indemnity: Clients may suffer significant financial losses or damages if a PI’s findings are inaccurate or incomplete. For example, if a private investigator provides incorrect information about a person’s financial status during a divorce case, the client may end up with an unfair settlement. Liability insurance protects PIs from issues arising from errors or omissions in their work, ensuring clients are not left to bear the financial burden of such mistakes.
- Compliance requirements: In many jurisdictions and for certain organizational types, such as a limited liability company (LLC), private investigators must carry liability insurance as part of the licensing or registration process. For example, in California, an LLC with five or fewer managing members must maintain adequate insurance covering errors and omissions arising from their services.
Liability insurance is a key part of professional responsibility and risk management in the industry. It ensures that private investigators can handle any legal claims resulting from their work, helping them run their businesses efficiently while protecting them and their finances.
Common Risks Faced by Private Investigators
Private investigators often handle cases that could lead to financial or legal trouble if mistakes occur. A few common risks private investigators face are:
Confidentiality Breaches
When PIs handle sensitive client information, they must keep it confidential. Breaching confidentiality can ruin their reputation as investigators and bring legal consequences.
Errors in Investigation
Private investigators try to gather accurate and reliable information for their clients. However, if the private investigator makes errors, oversights, or mistakes in the investigation, it can lead the PI to false conclusions. This situation can not only bring financial losses for clients but also potential liability for the investigator.
Legal Implications of Surveillance Activities
Conducting surveillance can be a gray area in the eyes of the law. Whether surveillance occurs in person or online, it risks breaking privacy laws, trespassing regulations, and rules of evidence. PIs need to know that their surveillance activities follow the law, or they may face legal repercussions. For example, if a private investigator conducts illegal wiretapping during a surveillance operation, they may face criminal charges and lawsuits.
Given the risks that private investigators face, having liability insurance offers a sense of security. It serves as a reliable backup plan, ready to step in should they encounter legal trouble.
Building Long-Term Partnerships
Private investigators often rely on insurance brokers to ensure they are well-covered. The key to this relationship is not a single transaction but a long-term partnership. Understanding their specific needs, listening to what PIs are looking for, leading with empathy, and ensuring they are getting the best quality insurance they can all contribute to making them feel valued and understood.
By cultivating meaningful relationships and offering strategic insights tailored to clients’ needs, brokers can establish themselves as trusted partners in navigating challenges and building resilience for the future. By providing the highest quality service, brokers can protect private investigators’ reputations, finances, and careers in the long run.
At Cochrane & Company, we are dedicated to providing retail agents and brokers with the highest-quality insurance projects. Contact us today to learn how we can help strengthen your relationship with your clients and ensure you have the right professional liability insurance to protect your business and your clients.
About Cochrane & Company
For over six decades, Cochrane & Company has been proudly at the forefront of the insurance industry. Our experience has enabled us to innovate in powerful ways, reimagining the E&S market and providing technology solutions that make it easy to do business with us. Licensed in all 50 states, we proudly serve clients nationwide, providing personalized and powerful solutions to help you become an even better partner for your clients. Speak to one of our experienced professionals today by calling (855) 967-0069.
