All types of Canadian businesses, government entities, nonprofit organizations, professionals, and contractors rely on consultancy services. Whether it is for a simple tweak in a computer software system or the development of a virtual database with the latest technologies, a consultancy firm can help determine if the move is right or wrong. There is no doubt constancy plays a major role in both offline and online business operations.
Professional environmental consultants operating within Canada’s borders have many risk exposures, with product liability, financial damage, implementation mishap, negligence claims, and physical damage. There are also risks that could result in non-diversifiable damage that cannot be reversed.
When you consider all of these risks, minor and severe, it makes one wonder why any professional, licensed energy consultant would continue to refuse liability coverage. Before you can understand the importance of being professionally insured, you need to know what it means. Learn more by reading the content provided below.
What Does ‘Being Insured’ Mean To Canadian Professionals?
When a Canadian professional is “insured,” it means he or she is covered under some type of insurance policy. Whether the coverage is life-, health-, liability-, automotive-, or travel-related does not matter at this point. What does matter is the professional is insured. Now, if you are trying to determine if the professional is a good fit for a specific project, the type of coverage becomes extremely important.
When consumers hire professionals, they do it with their investment security in mind. No one is willing to take a large financial risk without some type of protection. Before you even consider hiring a consultant or consultancy firm, you must ask what does “being hired” mean to this professional or firm. It is perfectly okay to pose this question directly to the consultant since it could be the difference in hiring or looking for another option.
When it comes to consultancy services, consumers, and consultants, “being insured” is everything. Hiring an uninsured consultant is definitely not the recommended course of action for any consumer. “Being insured,” on the other hand, is extremely important for all parties. But, you must dig a little deeper to determine what type of insurance the consultant is referring to when speaking of “being insured.”
What you are hoping to hear come out of the consultant’s mouth is “professional liability insurance.” This insurance policy offers financial coverage for the client and consultant. How is this possible? First and foremost, professional liability insurance specifically protects consultants and other professionals from financial damage related to negligence claims and lawsuits. In this case, the policy will cover all the consultant’s validated negligence claims. In return, it protects the consultants’ clients in the event she/he is found to be at fault for a negligent act.
If you just happen to be the unlucky client, the consultant’s Professional Liability Insurance (PLI) policy will partially or fully cover your initial investment. This is why it is so important for Canadian consumers to only hire PLI-covered professionals.
PLI also covers out of court settlements, monetary court judgments, and litigation costs, whether the claim does or does not end up in court.
Put Your Risk Exposures Up Against The Available Liability Insurance Policies
Sometimes a core PLI policy is not enough to offer Canadian energy assessors consultants 100 percent protection from lawsuits and claims. Each consultant’s risk exposures vary depending on several factors, including employer, business ownership, open contractual agreements, location of operation, finances, and market.
Independent consultants generally do not need an extensive liability policy, especially those who do not call themselves business owners or employers. This theory also applies to consultants who are accustomed to working on more than two contracts simultaneously. In any case, there is no such thing as too much insurance in the consultancy industry.
Now, if you consider yourself an employer and business owner with more than two open contracts running at the same time, a custom liability insurance policy is a necessity. Custom policies consist of various coverage types, such as professional liability, commercial general liability, general liability, business liability, and employer liability. Each of these types of insurance coverage will play a major role in providing 100 percent financial protection for your consultancy firm.
Professional Liability Insurance (PLI) – What Is It?
PLI is specific to professionals like consultants. It covers both a negligence claim and lawsuit financial damage. For example, a consultant utilizes his expertise to advise a client on how to properly deal with a new business partner. It turned out, the consultant’s advice was faulty, resulting in millions of dollars in financial damage. While the consultant did not set out to commit a negligent act, he did just that, costing the client his multi-million dollar investment.
The financial damage caused by professional negligence is covered under most core PLI policies. If the aforementioned consultant has a core or custom PLI policy, the client’s financial loss will be recovered. Depending on the cover amount, the PLI policy will cover some or all of the financial damage. The part at fault may or may not be required to cover any of the financial damage out of pocket.
General Liability Insurance (GLI) – What Is It?
General Liability Insurance (GLI) protects companies and professionals against claims and lawsuits associated with third-party accidents and property damage. Unlike PLI, GLI covers bodily injury, property damage, advertising errors, and reputational harm of a third-party, which in most cases is the client.
Unfortunately, some mishaps are not the fault of the policyholder, but the consultant still ends up with the responsibility in the end. For example, a customer climbs up on a small ladder to reach a product that is only available on the top shelf. When the customer attempts to place his foot on the last step, he slips, falls, and hits the ground below. The injury, a minor wrist sprain, warranted a visit to the local emergency room. Who do you believe is responsible for this accident?
Was it the client’s fault because he chose to climb the ladder instead of asking for assistance? Or, was it the business owner’s fault because her employee left the ladder in the aisle where the client was injured? There are several ways to look at the scenario, but when it comes down to it, the responsible party is the business owner. Since the accident occurred on the owner’s business property, she will be required to cover the injured customer’s medical bills and property damage if there were any.
Employer Liability Insurance – What Is It?
As an employer, you are responsible for your employees’ safety when they are on the clock. Being an uninsured consultancy employer just does not make sense because there are just too many risks involved. Regardless of your employee numbers, the risks do not change. The only thing that changes is the severity of the risks. For example, an employer with two workers has minor risks compared to an employer with hundreds of employees. But, when you break it down, they are risks just the same.
All employers operating within Canadian borders are required to carry worker’s compensation coverage. This insurance policy plays a major role in protecting Canadian workers from financial loss associated with workplace injuries. It also protects companies by covering workplace injury expenses that otherwise would fall into the business owner’s lap.
Unfortunately, there are a few workplace mishaps not covered under worker’s compensation in Canada. If a workplace injury or illness does not meet worker’s compensation requirements, the business owner will become responsible, which is where the employer’s liability insurance comes into play.
Employer’s liability insurance policies offer financial protection to workers and employers like worker’s compensation. However, the policy will not cover workplace injuries and illnesses covered under the employer’s worker’s compensation insurance policy. The policy will only kick in when the worker’s compensation denies the claim.
Business owners take on the responsibility of their employees the minute they are hired. This is only common courtesy, plus it is the law.
Disability Insurance
You biggest asset in life is your earning ability. If you are unable to work, you will need to rely on either your savings or borrow money to sustain your lifestyle. When these unfortunate circumstances occur, dependents and spouses are also impacted financially and emotionally.
Disability insurance coverage will provide you a monthly income benefit, usually totaling 70% to 80% of your income, when you are unable to work for a period of time due to injury or illness.
Types of disability insurance
- Long-Term Disability Insurance (LTD)
- Short-Term Disability Insurance
- Key Person Disability Insurance
- Self Employed Disability Insurance
- Mortgage Disability Insurance
- Temporary Disability Insurance
- Supplemental Disability Insurance
Need coverage in effect? Compare the market!
FAQ before purchasing liability insurance
- How much professional liability insurance do I need?
- How do I get a liability insurance policy?
- What does professional liability insurance cover?
- What is the difference between claims made & occurrence form of coverage?
- When will I need to be insured?
- What other professions need this type of insurance?
Other useful posts you should also read
- Canadian insurance companies that provide professional liability insurance
- How does the claims process work if I get sued because of my professional services?
- What is the cost of professional liability insurance?
- How do I apply for a professional liability insurance policy?
- How do I qualify for coverage as a professional service provider?
- What is the purpose of getting insured as a professional?
- How long will it take to get an insurance quote for my business?
