Errors & Omissions Insurance

Errors and Omissions Insurance Ontario

Errors and omissions insurance is professional liability coverage required by a variety of individuals and companies that provide professional services, such as accounting, engineers, marketing, consultants and IT services. Despite the best intentions of those in these fields, an error or omission in the performance of their services could cause financial type losses to their customers.

Liability arising from losses from a professional service are excluded under the standard commercial general liability policy without errors and omissions insurance. Ontario business owners should be aware of the fact that legal expenses to defend suits of alleged failure to provide adequate professional services can be significant. Coverage for legal costs for defending these suits is available under an errors and omissions policy.

What Is Errors and Omissions Insurance?

Errors and omissions insurance is a form of professional liability insurance that protects business and its employees from paying out of pocket for expenses related to legal claims made by clients for inadequate work or negligent actions. When they have errors and omissions insurance, Ontario policyholders are protected against financial strain if they need to be defended in court, even if allegations are groundless, because their insurance carrier will provide funds to cover legal defence fees and settlement costs that arise for an insured reason.

Who Needs Errors and Omissions Insurance?

If you’re a medical professional, lawyer, accountant, architect, engineer, real estate agent, marketing consultant, management consultant, event or wedding planner, tax preparer, personal trainer, broker, technology consultant, financial advisor, or any other type of professional practitioner in Ontario, your professional organization requires you to have professional liability insurance. But when it comes to errors and omissions insurance, Ontario professionals and service providers may need it even if they aren't obligated to have it by a professional organization. If you have an advice or service-providing business in exchange for a fee, or if you develop products, devices or components, you likely need errors and omissions insurance. Ontario professionals can get the right coverage in place by calling the experienced brokers at Morison Insurance.

What Types of Errors and Omissions are Covered By E & O Insurance?

Errors and omissions may sound a bit vague, but it’s a fairly accurate description of what is covered by errors and omissions insurance. Ontario policyholders with this type of coverage can expect it to cover liability costs related to:

• Mistakes
• Oversights
• Undelivered services
• Professional negligence
• Missed deadlines
• Misrepresentation
• Bad advice
• Acts of misconduct
• Violation of good faith
• Advertising injury
• Slander or libel
• Accusations of the above

What Does "Claims-Made" Mean for E & O Insurance?

Most E & O insurance policies are written on a “claims-made” basis. This means that any claim must be made and/or reported within the policy period in which it occurred, according to the time periods outlined on your policy for errors and omissions insurance. Ontario policyholders should be aware that these policies have retroactive dates—a date previous to the policy’s effective date where the alleged claim can be considered. The retroactive date is important as claims that arise out of an act prior to this retroactive date will not be covered by the policy.

Does Errors and Omissions Insurance Cover Defence Costs?

Generally yes, legal defence costs are covered by errors and omissions insurance if the legal action is resulting from an insured peril that falls under the purview of errors and omissions insurance. Ontario residents should note, however, that some E & O insurance policies also include defense expenses within the limit of liability. This, in essence, limits the amount of insurance that may actually be available to pay a claim. Some policies also exclude punitive damages. It is important to make sure the coverage fits your exposure because the wording on each policy can vary. For more information on this coverage, contact our Morison Insurance commercial brokers. We are here to help.

What Are Some Ways to Mitigate Loss for E & O Insurance?

Are you looking for tips on how to help control your insurance costs by mitigating loss on your errors and omissions insurance? Ontario policyholders can take steps such as:

• One, always have a written contract that explains what will be done, what will not be done and the fees.
• Two, communicate with your customers throughout the job and manage expectations.
• Three, have a quality control procedure in place and check the results.

Who Can I Contact If I Need Errors and Omissions Insurance?

Morison Insurance represents several specialized insurance markets for various professional service providers that offer comprehensive coverage for errors and omissions insurance. Ontario residents who are interested in more information or would like to get a quote can contact our insurance professionals by phone at 1-800-463-8074 or by starting an online quote. We are here to help.

This content is written by our Morison Insurance team. It is provided for general information only. Insurance needs differ from person to person, and this article is therefore not a substitute for professional advice about your individual insurance needs which can be obtained by speaking to one of our brokers.