Errors and Omissions insurance is designed to protect various professions when they’ve made a mistake or wrongful act that results in financial harm to the people those professions serve. The specifics of each policy vary, depending on the occupation. Examples of people who might consider Errors and Omissions Insurance include but are not limited to real estate brokers, engineers, software developers and attorneys.
Do I require errors and omissions insurance?
In Ontario, Errors and Omissions insurance is required for certain professionals such as, financial consultants, estate planners, realtors, accountants and tech professionals. As an advisor, mistakes happen that often lead to consequences therefore it is always important to have the right coverage in place so you are protected in the event of a lawsuit.
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. Please see the Claims section of our website for further details on how to report a claim or a situation that may give rise to a claim.
What is the difference between a Limit of Liability and the Aggregate Limit of Liability?
The Limit of Liability refers to the maximum an Insurer will pay for any single claim. The 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.
What does the term Prior Acts mean?
Prior Acts refers to your professional activities that were performed prior to binding of coverage through a policy. Coverage can extend to claims first made against you during the policy period arising from alleged acts which took place prior to the date that the policy came into effect. However, the policy will 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 an advisor has uninterrupted coverage (i.e. a gap in coverage may negate prior acts coverage).
What is a Retroactive Date?
A retroactive date is a provision found in many claims made and reported policies that eliminates coverage for wrongful 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 wrongful 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:
- 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).
Retirement or leaving the business and/or giving up a license/registration.