Why the need for Errors & Omissions coverage?

In Canada, court awards have risen sharply in recent years as clients look for a higher level of accountability than has ever been expected before. Increasingly, people are showing a willingness to turn to the courts when they believe that goods or services they receive are not satisfactory. The fact is, even if you are not at fault, defending yourself in court is a costly business - and a threat to your financial security.

In the new global economy it is common for Canadian companies to perform work for clients based in a jurisdiction outside of Canada. In this case, and particularly when work is being performed in the United States, the threat of facing legal suits for alleged third party financial loss increases significantly.

Will your existing insurance policy protect you?

Other liability policies do not respond to suits involving professional services or advice. Nor do they cover any legal disputes involving pure financial loss.
Errors & Omissions insurance partners with your Commercial General Liability coverage - filling in any dangerous gaps.

When do you require E&O coverage?

Lawsuits can affect any profession. Exorbitant claims can occur over:

Do You Need Errors & Omissions Insurance?

• Are you a professional or an expert in your chosen field?
• Is the work you do skilled and specialized?
• Do your professional duties involve providing advice or services?
• Do your customers expect a high degree of service?
• Does your profession demand a high degree of moral principles and standards?

If you answered YES to any of the above, you may be vulnerable to lawsuits that most business insurance policies don't cover!

You Can Be SUED!

Recent cases employ the following test to determine if an activity is a professional service; that is if your service is one which embraces "both a mental or intellectual exercise within a recognized discipline and the application of special skill, knowledge and training to the particular function in question."

Lawyers, doctors, dentists, opticians, nurses, physiotherapists, chiropractors, veterinarians, dietitians, occupational therapists, accountants … to name a few fall within the term "Professional." I'm sure you can think of several other occupations, which likely meet this test.

Issues arising from Professional Liability, or MALPRACTICE, are of great concern to both you , the professional, and your client. There was a time when socially your client would never have even considered bringing an action against you. . . not even in instances where there was clear negligence or an obvious error. Times have changed and today you could be a target for lawsuits.

Today, the public and our legal system expect much more from you and are much more inclined to initiate a lawsuit. When adjudicating cases, the courts have based their judgment on an increasingly higher standard of care and responsibility. The ever increasing levels of education, training, experience and reputation of professionals have led the courts and your clients to expect service which is superior if not perfect in all circumstances.

This higher accountability can be overwhelming and even frightening for many in your profession. To think that you are responsible for every action which you do or allegedly failed to do, and that any error however innocent, could bring severe or negative consequences, is quite unnerving.

Why have public attitudes changed toward the professional? There are a number of contributing factors. Part of the answer is that the public has become more informed of its legal and contractual rights, and, rightly or wrongly, has been led to believe that a legal action should be initiated from any turn of events that was not expected by the client.

In addition, the media has brought to public attention the litigious climate of our modern society. Many legal actions have been sensationalized in the press. Lawyers have become much more aggressive in their demands for compensation, seeking ever larger and more extensive settlements.

Another reason why public attitudes have changed is because the relationships professionals have with their clients have evolved. Traditionally, the connection between the professional and the client was much more personalized than it is today. In the past a client's trust and confidence in a professional was absolute. Our changing society, and the financial constraints felt by many clients, have heightened their awareness and increased your accountability.

Professional liability or malpractice insurance is one form of protection for you and your clients. Coverage will shield personal assets and will help maintain your good reputation through the defense of allegations of wrongdoing which might be frivolous or false. For the client who has suffered some damages through your actions, liability insurance will ensure that there are adequate funds available to make amends for the wrong that has been done.

A professional liability policy or malpractice insurance policy will cover your liability arising out of errors, omissions or negligent acts, which may arise from your normal or usual duties. The protection also covers allegations whether or not factual, and of course, your legal costs to defend a civil suit.

When a professional is an employee, the firm as the employer, is generally responsible for the actions of that employee. However, a court of law may find the employee personally responsible for an error, omission or negligent act committed as a professional individual.

A professional liability policy offers you the peace of mind of knowing that you have independent coverage.