As a professional who provides services and advice to your clients, you are vulnerable to legal risks and expenses that could arise from allegations of negligence, errors, omissions, defamation and other potential issues. Even if the allegations are untrue, as a business owner, you could be forced to pay out of pocket for the cost of your legal defence and other related fees. Should you be found liable in court, you could be responsible for eye-watering settlement costs. Ontario professional liability insurance protects you against financial hardship if specific allegations strike you and you need legal support. The experienced brokers at Morison Insurance can find the right combination of coverage that will let you rest easy at night knowing you are protected against severe financial loss related to liability allegations.
Ontario professional liability insurance, which is also known as errors and omissions insurance or malpractice insurance depending on the type of profession it is being applied to, is a type of business insurance coverage that offers financial protection against costs incurred by defending yourself against allegations of professional negligence, inaccurate advice, wrongful business practices, breach of contract and conflict of interest. Suppose you have legal action brought against you for one of the reasons listed above. In that case, your professional liability insurance policy will prompt your insurance provider to provide the necessary funds to cover expenses such as legal mediation, legal defence in court, settlement costs and potentially other related expenses as well, up to the coverage limit listed on your policy.
Professional liability insurance protects people who give professional advice, make educated recommendations, design solutions or represent or advocate for the needs of others. People who may benefit from this type of coverage include:
The list above is not exhaustive, so there are other types of professionals who need the protection against financial loss that is afforded by professional liability insurance. Ontario insurance brokers will tell you this is essential coverage for anyone who deals with clients who may claim that something done on their behalf was done incorrectly and that this error has caused them a financial loss.
Like most forms of business insurance (with the exception of commercial auto insurance), the government does not legally require professional liability insurance. However, many professionals are subject to professional liability coverage requirements in order to complete their registration with their professional associations, so in a practical sense, it is mandatory insurance coverage for those professions. For example, optometrists are required by the College of Optometrists of Ontario to hold professional liability insurance that meets specific minimum coverage limits and includes tail insurance. Some types of professionals may or may not be able to access professional liability insurance coverage through their professional associations.
Even if a professional association does not require them to have professional liability insurance, Ontario professionals who provide design, consulting, advice or advocating services can't afford the risk of going without it. As anyone who has ever been involved in some litigation knows, the cost of legal services can easily exceed hundreds of thousands of dollars—and that's before legal settlements are added on to someone who has been found legally liable for professional negligence or other similar allegations. Most people don't have the funds to pay out of pocket for those costs, and professional liability insurance gives the financial protection necessary to avoid severe financial hardship. It's easy to think, "I have a great relationship with my clients, so I don't need to worry about professional liability," or "I'll just be cautious, and it won't be a problem," but that's not a realistic expectation. Even the most cautious or conscientious person can't prevent every mistake or mishap that could lead to a professional liability claim, so the proper Ontario professional liability insurance coverage is essential to protect yourself against financial loss.
This is a fairly common misconception for several reasons—the names of these two coverages sound very similar, they're both types of liability coverage, and commercial general liability insurance is a standard part of most business insurance policies. Those factors lead many people to think that their commercial general liability (CGL) coverage is sufficient to protect them against professional liability insurance claims. However, that's not the case.
Commercial general liability is an essential part of a comprehensive business insurance policy that provides financial protection against liability costs that could arise if you or one of your employees are accused of causing third-party property damage or bodily injury. A classic example is a customer entering your workplace and sustaining injuries when they slip on a wet floor. In that type of scenario, the customer could choose to sue to recover medical expenses and potentially other costs, such as a loss of income during recovery, and your commercial general liability coverage would apply to the related legal defence and settlement costs.
Professional liability coverage also provides you with funds to handle liability-related costs, but in different types of situations than commercial general liability. Ontario professional liability insurance applies to issues such as:
In general, you can expect legal defence costs to be covered by professional liability insurance if the litigation results from an insured peril, such as the ones listed above, related to professional liability insurance. Ontario residents should be aware that defence costs may or may not be included within the limit of liability on specific professional liability insurance policies. That means that the amount of insurance compensation that may actually be available for a professional liability claim is limited. It's also worth noting that punitive damages are excluded from some policies. Ensuring that your specific professional liability insurance coverage fits your unique risk exposures is essential because how policies are worded can vary significantly. If you need more time to determine if you currently have adequate coverage, the best course of action is to contact the reliable insurance brokers at Morison Insurance. We have the experience and training to assess your insurance risk exposures and recommend the best possible coverage so you can sleep easily at night knowing you have the financial protection you need. To determine if your policy includes defence costs, contact your expert Morsion Insurance to confirm.
While Ontario professional liability insurance is an essential part of a commercial insurance policy for certain types of professionals, it doesn't protect against everything. Here are some of the perils that professional liability insurance coverage does not apply to:
An essential fact to understand is that professional liability insurance coverage only applies to professional liability scenarios. If you were to make a professional error that only affected your business, your professional liability insurance would not apply because there's no element of liability when you cause harm to yourself or your own business.
The amount you can expect to pay for Ontario professional liability insurance will vary quite a bit based on factors such as:
Generally speaking, professional liability insurance costs between $500 to $2,500 per year. It makes sense that you want to know exactly how much you'll have to pay right now, but we need to learn more about you and your business to give an accurate estimate. Contact our knowledgeable Morison Insurance brokers. We'll get started on finding the right Ontario professional liability insurance to address your specific risk exposures and ensure you're covered against all the perils you're most likely to encounter.
Ontario professional liability insurance policies are usually issued on a claims-made basis, meaning that your coverage must be active when the claim is made against you rather than when the incident occurred. Suppose an incident happens before you have professional liability insurance coverage, but you have a policy in place when you are sued. In that case, your coverage would only apply to that incident if you had errors & omissions coverage in place at the time of the incident. Conversely, if you have coverage at the time when the incident occurs but not when you are sued, your coverage will not apply. For example, if you retire and cancel your professional liability insurance coverage but are sued a year or two later for something that happened before you retired, you'll be left without the necessary insurance coverage even though you did have an Ontario professional liability insurance policy in place when the original incident happened.
This is where tail coverage comes in and why it's so important to have. Tail insurance (also called an Extended Reporting Period) extends the coverage period of your professional liability insurance, so it still applies for a certain period after you retire. How long it applies will vary depending on how much tail coverage you have added to your policy, and how long you need tail coverage for will vary based on your profession and unique risk exposures. It is essential, as you can still have legal action brought against you years after an incident allegedly occurs. That's also an excellent reason to maintain continuous coverage throughout your career, not just when you're actively working with clients.
What Are Situations Where I Would Need Professional Liability Insurance?
Insurance of any type is a complex topic, and of course, professional liability insurance is no exception. It can be a lot easier to understand when you see some specific situations where it would benefit you to have professional liability insurance, such as:
If you currently have inadequate coverage for your professional liability insurance or don't have coverage at all, the experienced insurance brokers at Morison Insurance are here to help. We work for our clients, not the insurance companies, so your best interests are our top priority. Count on our team to thoroughly and thoughtfully assess your insurance needs, then search high and low for the right Ontario professional liability insurance quotes to address your specific insurance requirements. Call us today at 1-800-463-8074 to learn more about your professional liability insurance options and get started on a quote so you can have peace of mind knowing you've got the necessary protection to avoid serious financial losses.
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.