Professional Liability Insurance
Sutherland Insurance is a fifth-generation independent brokerage in Guelph, Ontario that places professional liability insurance across the province. Professional liability insurance covers a claim that a professional service, advice or design was negligent and caused a client financial loss. Sutherland Insurance has placed commercial business from Guelph, Ontario since 1870.
Key takeaways
- Professional liability insurance is mandatory for several Ontario licensed professions, including insurance brokers registered with RIBO and real estate salespersons registered with RECO.
- Ontario mortgage brokerages are required to maintain professional liability insurance under regulations made under the Mortgage Brokerages, Lenders and Administrators Act, 2006.
- Professional liability insurance is written on a claims-made basis, so the policy in force when the claim is first made responds, subject to the retroactive date.
- Professional liability insurance covers financial loss from professional services; commercial general liability covers bodily injury and property damage. The two do not overlap.
- Who it is for
- Ontario professionals and firms giving advice, designing, or delivering a service for a fee
- Legally required in Ontario
- Yes for several licensed professions, including RIBO brokers, RECO registrants and mortgage brokerages
- Commonly required by
- Client contracts, professional bodies, lenders and provincial procurement
- Coverage trigger
- Claims-made: the policy in force when the claim is first made responds
- Retroactive date
- The date from which prior professional work is covered
- Extended reporting period
- An optional tail allowing claims to be reported after the policy ends
What is professional liability insurance?
Professional liability insurance, also called errors and omissions or E&O insurance, covers a claim that a professional's advice, service or design was negligent and caused a client financial loss. It pays the damages and the cost of defending the allegation, including where the allegation is unfounded. It responds to financial loss rather than to physical injury or property damage.
Two dates govern every professional liability policy, and both matter more than the limit. The retroactive date sets how far back professional work is covered: work performed before it is outside the policy. The extended reporting period, or tail, allows a claim arising from past work to be reported after the policy has ended, the mechanism that matters most on retirement or a sale.
What can an Ontario professional liability insurance policy cover?
What a policy can cover
- Damages arising from a negligent act, error or omission in the professional services described in the policy schedule
- Legal defence costs for a covered allegation, including where the claim is ultimately unfounded
- Claims arising from work performed on or after the retroactive date shown on the policy
- Breach of a professional duty of care owed to a client, including failure to deliver a service to the standard required
- Loss of client documents and records held by the professional, within the sub-limit stated in the wording
- Optional extensions including regulatory and disciplinary defence costs, and an extended reporting period on cancellation
Commonly excluded under standard Ontario professional liability insurance wordings
- Bodily injury and property damage, which commercial general liability insurance addresses
- Claims arising from work performed before the retroactive date shown on the policy
- Circumstances known to the insured before the policy incepted that could reasonably give rise to a claim
- Deliberate dishonest, fraudulent or criminal acts, subject to the severability terms in the wording
- Contractual guarantees, warranties and cost estimates that exceed the professional's duty of care
- Data breach and network security liability, which cyber insurance addresses
Exclusions vary by insurer and by policy form; the issued policy governs.
How much does professional liability insurance cost in Ontario?
The factors that move an Ontario professional liability premium, in approximate order of influence, and why insurers look at each one.
| Rating factor | Why |
|---|---|
| Profession and the services performed | Structural engineering and financial advice sit far above most consulting classes. |
| Annual fee income | Fee income proxies both the volume of work and the value at risk on each file. |
| Limit and aggregate selected | The limit sets the insurer's maximum exposure on the policy year. |
| Retroactive date on the policy | A longer retroactive period exposes the insurer to more past work. |
| Claims and circumstances reported previously | Prior notifications are a filed underwriting factor for every professional market. |
| Contract and engagement-letter practices | Written scope limits the duty of care a court will find. |
| Work performed in the United States | United States jurisdictions carry higher defence cost and award severity. |
| Deductible selected | A higher deductible transfers more of each claim to the firm. |
Who needs professional liability insurance in Ontario?
Several Ontario professions are required to carry it as a condition of licensing. Insurance brokers registered with the Registered Insurance Brokers of Ontario must maintain professional liability coverage, real estate registrants are covered through the Real Estate Council of Ontario programme, lawyers through LAWPRO, and mortgage brokerages under the Mortgage Brokerages, Lenders and Administrators Act, 2006.
For professions with no licensing requirement, the driver is contractual. Which policy is arranged, and at which limit, depends on circumstances that vary from one firm to the next:
- Whether a regulator or professional body imposes a coverage requirement as a condition of registration.
- What limit client contracts, master service agreements and procurement processes specify.
- How far back professional work needs to be covered, which sets the retroactive date sought.
- Whether the firm supervises subcontracted professionals whose work it is responsible for.
- Whether work is performed for clients in the United States or in other jurisdictions.
- Whether the firm expects to be sold, wound up or retired from, which makes the tail provision material.
What situations does professional liability insurance commonly address in Ontario?
Professional liability policies are arranged for a wide range of professional circumstances across Ontario, and the coverage available differs in each. The situations below are common among Sutherland Insurance clients in Guelph and across the province, and each one changes which markets will write the risk.
- A Guelph consultant whose recommendation is alleged to have caused a client to lose a contract.
- A bookkeeping firm alleged to have misfiled a return, exposing a client to interest and penalties.
- A design professional whose specification is alleged to have caused a costly rework on site.
- An IT services firm alleged to have implemented a system that failed to meet the agreed specification.
- A retiring practitioner arranging an extended reporting period so past work stays covered.
- A firm receiving a demand letter about a file closed four years ago, where the retroactive date determines the outcome.
How Do I Get Business Insurance Through Sutherland Insurance?
Getting insurance through Sutherland Insurance is simple. You can request a quote online or call 519-822-0160 to speak with a licensed broker. We take the time to understand your business, identify your exposures, and find coverage options that fit your needs.
Our Process:
- Request a Quote. Complete an online quote request or call our office to speak with a licensed insurance broker.
- Tell Us About Your Business. Your broker will gather information about your operations, property, revenues, employees, vehicles, contracts, and any other areas that may require coverage.
- Review Your Risks and Coverage Needs. We assess your business exposures and insurance requirements to determine the appropriate coverage limits and options.
- Market Your Account. Sutherland Insurance compares the available commercial markets to help find the best combination of coverage, service, and price.
- Present Your Options. Your broker will review the available quotes and provide recommendations based on your specific needs and goals.
- Bind Coverage and Provide Documentation. Once you select coverage, we arrange the policy and provide any required documentation, including certificates of insurance for clients, landlords, lenders, or other third parties.
What makes Sutherland Insurance different from a direct insurer?
When a claim happens, Sutherland Insurance acts for the client with the insurer, and an in-house claims representative is available on any claim. Sutherland Insurance is an independent brokerage and compares the markets it holds contracts with rather than selling one company’s product. A person answers the phone at Sutherland Insurance, 519-822-0160, Monday to Friday, 8:30 a.m. to 5:00 p.m.
Frequently asked questions
Who is required to carry professional liability insurance in Ontario?
Several Ontario professions carry it as a condition of licensing. Insurance brokers registered with the Registered Insurance Brokers of Ontario must maintain it, real estate registrants are covered through the Real Estate Council of Ontario programme, Ontario lawyers through LAWPRO, and mortgage brokerages under the Mortgage Brokerages, Lenders and Administrators Act, 2006.
What is the difference between professional liability and general liability insurance?
Professional liability insurance responds to financial loss caused by professional advice, design or service. Commercial general liability responds to bodily injury and property damage caused by a business's premises, operations or products. A claim that a consultant's advice lost a client money falls to professional liability; a visitor injured on the premises falls to general liability.
What is a retroactive date on a professional liability policy?
The retroactive date is the date from which past professional work is covered. Work performed before it falls outside the policy, however the claim arises. Because professional liability insurance is claims-made, moving insurers without preserving the existing retroactive date can silently remove coverage for every file completed before the move.
What is an extended reporting period on a professional liability policy?
An extended reporting period, often called a tail, allows a claim arising from work done during the policy term to be reported after the policy has ended. It matters most on retirement, on a business sale, or when a firm ceases to trade, because a claims-made policy otherwise stops responding when it lapses. Terms differ by insurer.
Does professional liability insurance cover a data breach?
Professional liability wordings exclude data breach and network security liability, which cyber insurance addresses. Some Canadian markets attach a limited cyber extension at a modest sub-limit. Where a firm holds client data, the two policies are commonly arranged together so the exposures do not fall between them.
How many markets does Sutherland Insurance place professional liability across?
Sutherland Insurance places commercial business, including professional liability, across the markets it holds contracts with together with multiple managing general agents and affiliates across Canada. It is an independent brokerage licensed by the Registered Insurance Brokers of Ontario. It is not tied to any single insurer.
Get your professional liability insurance quote
A licensed Sutherland Insurance broker compares the available markets on every quote request.
Get your professional liability insurance quote Call 519-822-0160
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