Errors and Omissions Insurance
Mistakes happen. That’s why Errors and Omissions (E&O) insurance in Ontario, also known as professional liability insurance, is an important consideration for your business operations. E&O can provide financial coverage in the event of accidental errors or alleged negligence.
If you are sued because of errors made by you, your company, or your employees, E&O insurance can protect you, and your business, when a mistake or wrongful act results in financial harm to the clients you serve. The specifics of each policy vary, depending on the area of expertise, services, and scope of the business.
Who needs Errors and Omissions (E&O) Coverage?
Generally, any business across Ontario that offers a service or advice for a fee has exposure to errors and omissions risks and can benefit from the peace of mind that comes with E&O coverage.
For some professional industries, E&O coverage is required and may be available with their professional associations. Many practices and professional services can still benefit from discussing their coverage with a trusted insurance advisor to review the scope of their risks and apply additional coverages for E&O to protect your business as you grow.
Types of Industries that need to consider Errors and Omissions Coverage include:
- Architects and engineers
- Event services and planners
- Gyms and personal trainers
- Technology including hardware manufacturers and software developers
- Lawyers (excess coverage in addition to the Law Society)
- Hair salons and spas
- Healthcare operations (including in-home nursing and PSW, care homes, dental practices, cosmetic health services, nutritionists, naturopaths, and recovery centers)
- Home inspections
- Interior designers
- Immigration consultants
- Trademark & patent consultants
- Recruitment and employment firms
- Physiotherapists, massage, therapy, and chiropractors
- Professional services
Factors considered in determining premiums for E&O coverage:
- Scope professional services offered
- Number of years of experience
- Number of employees
- Annual and projected revenue
- Business size
- Claims history
How E&O coverage can help your business:
- Cover legal expenses.
Legal costs can add up. E&O can help your business cover unexpected legal fees in the event of an alleged error in the advice and/or services provided.
- Meet contract requirements.
Many service agreements will require professional services to prove their E&O coverage as a term of the contract.
- Stay competitive.
Carrying a sufficient E&O policy can give you a competitive edge providing your clients with added peace of mind and security in your service/deliverables.
- Manage the claim process.
As your broker, we can help navigate the process in the event of a claim.
Errors and Omissions Insurance Solutions
Do I need errors and omissions insurance in Ontario?
Do you have a professional designation or do people seek your opinion in your field of expertise? Chances are, you have a professional liability exposure that is not covered by a standard commercial general liability insurance policy.
Even if you have never made an error or omission, if someone alleges you have, a professional liability policy will cover the expenses involved in defending you.
What is a Claims Made and Reported Policy?
Errors and Omissions (E&O) policies are written on a ‘Claims Made and Reported’ basis, meaning that the policy that is in force at the time a ‘claim is made and reported‘ (as opposed to when the error may have been made) is the policy that would potentially respond.
As a condition of an E&O policy, it is imperative that you report actual claims or situations that may give rise to a claim to the Insurer and Gifford Carr as soon as they come to your attention. We have a 24hr emergency service to help get our clients started in the event of a claim – because we know emergencies don’t wait for the standard 9-5. So no matter when you need the support, we are here for you.
What is the difference between a Limit of Liability and the Aggregate Limit of Liability?
Limit of Liability: refers to the maximum an Insurer will pay for any single claim.
Aggregate Limit of Liability: refers to the maximum an Insurer will pay during a policy period.
In some cases, if multiple claims arise from one circumstance or error, an Insurer may consider all such claims as a single claim, for the purposes of applying the limit of liability.
If multiple claims arise in one policy period from separate occurrences, then the limit of liability will apply to each claim, and the aggregate limit of liability will apply as a maximum the Insurer will pay in one policy period.
What does the term Prior Acts mean?
Prior Acts refers to your professional activities that were performed prior to the binding of coverage through a policy. The policy can exclude any prior and/or pending litigation or prior knowledge of any claim or circumstance(s) that could give rise to a claim, and requires that a professional or firm have uninterrupted coverage (i.e. a gap in coverage may negate prior acts coverage). This is achieved by acknowledging a “retroactive date”.
(See the next FAQ for details)
What is a Retroactive Date?
A retroactive date is a provision found in many claims made and reported policies that eliminates coverage for prior acts that occurred prior to a specified date. The retroactive date (if applicable) reflects the earliest date for which an Insurer will provide coverage.
What is an Extended Reporting Period (ERP)?
An ERP extends the time period for which a claim can be reported after an advisor has retired or otherwise ceases to practice, for acts that occurred prior to retirement/cessation of practice.
Terms of the ERP vary from one policy to the next. Your liability does not cease because you are no longer practicing and as such an ERP is available for purchase in the following instances:
- Retirement or leaving the business and/or giving up a license/registration.
- Death (an estate may purchase the ERP on behalf of a deceased agent as long as it is within the 30 days after the expiry of the policy).
- Disability (in which an insured gives up the license because they are no longer able to work).
- The firm or practice is sold. It may be a requirement of the sale that the seller obtains an ERP.
What is not covered in an Errors and Omissions policy?
- Criminal, dishonest, or fraudulent acts;
- Violation of securities acts;
- Cost guarantees or price estimates; or,
- Incorrect estimates of profits or economic returns.
- Patent & Misappropriation of information.
- Contractual obligations or breaches of
- Bodily Injury or Property Damage
What is the difference between Commercial General Liability (CGL) and Errors and Omissions (E&O) insurance?
Commercial General Liability (CGL) insurance is designed to cover the legal liability imposed on you or your firm for bodily injury or property damage claims to a third party arising from your operations.
Errors and Omissions (E&O) insurance is designed to cover damages and claims expenses for which you or your firm is legally obligated to pay due to a wrongful act.
Together, they form a comprehensive insurance policy package. Connect with your broker to understand your insurance and if the scope of your E&O risks are covered with your current policies.