Every profession is unique, with different exposures and risks. Depending on the level of these exposures and risks, you will need a specific amount of professional liability insurance (PLI) coverage. The idea is to protect you and your company from financial loss associated with third-party claims and civil lawsuits. Saying that, almost every profession, including accountants, consultants, paralegals, chiropractors in Ontario, Canada should have in the range of $1,000,000 Professional Liability Insurance along with $1 – $2 Million in CGL depending on the risk exposures.
What Does Professional Liability Insurance Cover?
Professional liability insurance protects against financial loss associated with copyright infringement, negligence, liable, errors, and slander. If at any time you need to hire a litigation team, the insurance will kick in and help cover the expenses. Depending on how much coverage you have, the insurance may cover all or only part of the overall expense.
In addition to this, if you are lucky enough to encourage the complainant to settle out of court, the insurance will help reduce your out-of-pocket expenses. Again, the amount you pay out-of-pocket will depend on the amount of your coverage. For example, if you carry a $1 million E&O policy, you may not need to pay a dime, if the settlement does not exceed the coverage amount, other than deductible amounts. Even if your coverage is minimal, the insurance will help reduce the impact of the outcome of your case.
PLI insurance also covers monetary judgments which in other words is when court orders you to pay for damages, which have been known to bankrupt companies. This is the only real protection you will have against major financial loss associated with civil lawsuits and judgments.
Who Needs Professional Liability Insurance?
Every professional offering services in Canada must obtain professional liability insurance. In fact, you must obtain this coverage prior to applying for your business license or contracting for work, because a copy must be included with your application. If you do not provide this information to the governing body or the party hiring you, your application may not be accepted.
How Much Coverage Do I Need?
Understanding the importance of errors and omissions (E&O) insurance will help you determine how much coverage you will need. Licensed professionals operating in Canada are require to carry E&O insurance. The governing bodies and licensing agencies for professionals, such as architects, interior designers, attorneys, doctors, podiatrists and mediators, are responsible for protecting Canadian consumers from fraud. One way they are able to do this is by requiring all licensed professionals to obtain and carry professional liability insurance.
Each professional is required to carry a specific amount of coverage. The government and licensing agency work together to determine this amount. So, if you have any questions, you should contact your professional licensing agency or governing organization that is responsible for enforcing laws associated with your profession.
The amount of coverage requirement for each profession will vary. However, you should expect to be required to purchase an E&O policy with a coverage limit between $500,000 to $1 million.
How To Determine The Rate Of E&O Insurance?
The best way to determine how much you will need to pay monthly or annually for PLI coverage is with a free quote. Just contact your local insurance company or broker to request a free quote. You can also read on our website if you want to learn about how to get professional liability insurance as a professional in Canada. It is recommended to obtain quotes from at least three insurers. Once you receive the quotes, you can compare them to see which company is offering the best deal and rates. You should not base your final decision on the lowest rate, because some insurers will try to pull in new customers by offering them low rates for policies with limited coverage.
Free quotes are available via phone or online at most insurance company websites.
Other Frequently Asked Questions about Professional Liability Insurance
- How do I get a policy?
- What does this insurance cover?
- When will I need to be insured?
- Who needs this type of insurance?
Other useful posts
- Canadian insurance companies that provide PLI
- How does the claims process work?
- What is the cost?
- How do I apply for a policy?
- How do I qualify for coverage?
- What is the purpose of getting insured as a professional?
- How Long Does it Take to Get a Quote?
Professions we commonly provide insurance for: