Errors and omission insurance guide: Introduction
This page provides you with all the necessary information in order to make an informed choice about errors and omissions insurance (E&O insurance). Additionally, we will connect you with an experienced commercial insurance broker who will provide you with errors and omission insurance advice and will assist you with a quote.
What is errors and omission insurance?
Errors and omission insurance is a special type of insurance that protects you or your company in case your service / advice results in negative financial consequences for your client and he / she decides to sue you.
This type of insurance is very important for professions that operate in the service and advice industry, (e.g. lawyers, doctors, accountants). This insurance can have slightly different names across different job categories e.g. professional liability insurance for lawyers, architects, engineers and malpractice insurance for doctors and other health-focused jobs.
It is important to mention that this insurance not only protects you in case of professional mistakes, but also takes care of legal costs should you be sued and win the case. Legal costs can quickly add up to thousands of dollars and negatively impact your business.
How is errors and omissions insurance different from general liability insurance?
General liability insurance (or commercial liability insurance) only covers property, physical damage or bodily injury but not a financial loss of your clients or customers. That’s where errors and omission insurance comes in to close the gap.
For some jobs, (e.g. accountants and consultants) the risk of wrong financial advice is much higher than the risk of physical damage or bodily injury.
What jobs require errors and omissions insurance?
Some professions require errors and omissions insurance by law – examples of such specialists are mortgage brokers, insurance brokers, doctors, dentists, and many others. It makes sense, however, to consider this type of insurance for numerous occupations even if it is not a mandatory requirement – if a client or customer can sue you, you probably want to be protected. Below you will find a list of professions that should consider errors and omissions insurance.
| Accountants | Designers | Medical staff |
| Actuaries | Doctors | Paralegals |
| Architects | Engineers | Project managers |
| Attorneys | Event planners | Recruiters |
| Bookkeepers | Insurance brokers | Software developers |
| Chiropractors | IT specialists | Therapists |
| Consultants | Lawyers | Trainers |
| Engineers | Management consultants | Translators |
| Dentists | Mortgage brokers | Travel agents |
There are also other jobs that may benefit from having an errors and omissions insurance policy. Connect with an experienced E&O insurance specialist to find out if an errors and omissions insurance policy would make sense for your job, and how much an errors and omissions insurance quote would be.
What does an errors and omissions insurance policy typically cover?
An errors and omissions policy can cover a broad range of risks. Here is an overview of key protection elements you should know about:
| Coverage for… | Brief description | Example |
|---|---|---|
| Settlement and defense costs | The majority of E&O policies cover costs to defend you or your company if you are being sued by your client. This typically includes your settlement costs. | As a life insurance broker, you did not manage to complete your paperwork in time and a client, who purchased a life insurance policy from you died, before receiving a in-force policy. The family of the deceased person sues you for negligence. |
| Legal costs | A coverage that pays for legal costs even if you were found not at fault since these expenses can add up quickly. | As a management consultant you are sued by your client for developing the “wrong” growth strategy for the company. You manage to prove in the end that you provided your client with all the information and proper recommendations, but there are still tens of thousands in outstanding legal fees. |
Many other aspects of E&O insurance should be considered as well: addressing claims related to work that was completed before your involvement, international coverage, liability of your spouse and many others. An experienced, certified insurance broker can navigate you through the different options and offer coverage that is right for you.
What companies are offering errors and omission insurance in Canada ?
Here is an overview of companies that are approved as E&O providers by FSCO (Financial Services Commission of Ontario). The list can vary from province to province (latest revision: June 2015).
| Approved errors and omissions insurance providers for new business and renewals |
|---|
| AIG Insurance Company of Canada |
| AEGIS through Lloyd’s of London |
| The Sovereign General Insurance Company |
| Intact Insurance Company, Western Division |
| Liberty International Underwriters, a division of the Liberty Mutual Insurance Company |
| Royal & Sun Alliance Insurance Company of Canada |
| Lloyd’s of London (Independent Mortgage Brokers Association of Ontario Sponsored Program) |
| International Insurance Company of Hannover Ltd. through A.M. Fredericks Underwriting Management Ltd. |
| Lloyd’s of London through Groupassur Inc. |
| Arch Insurance Canada Ltd. |
| Lloyd’s of London through Catlin Canada |
| Approved errors and omissions insurance providers for restricted new business and renewals |
| CUMIS General Insurance Company |
| Approved errors and omissions insurance providers for renewals only |
| Chubb Insurance Company of Canada |
| Canadian Association of Accredited Mortgage Professionals |
| Independent Mortgage Brokers Association of Ontario |
Sources: Financial Services Commission of Ontario, Errors and Omissions Insurance Providers