Based in Ontario, Contractors Insurance is a trusted commercial insurance brokerage firm that focuses on providing customized insurance for professionals and contractors. One of the many types of insurance we provide is professional liability insurance.
Professional liability insurance is essential for architects, engineers, construction managers, etc. We have helped numerous professionals in getting the coverage they need. Count on us to have the experience and expertise necessary to guarantee only the best for our clients.
What Is Professional Liability Insurance?
Professional liability insurance, also known as Errors and Omissions (E&O) Insurance, is designed to protect professionals and firms in the event of mistakes or negligence—whether actual or alleged—with the services or professional advice they provide.
These incidents can escalate into a lawsuit and cause steep settlement fees. When this happens, professional liability insurance will cover the following:
Errors in Professional Work/Service
Errors in professional work or service mean that the work has been done, but incorrectly.
“Errors” encompass misstatements, wrong advice, unsuitable designs, or mismanagement. In the construction industry (and other similar industries), if these errors result in delays, demolishing work, redoing work, or fatalities, the responsible professional or firm will be liable and lawsuits will arise.
With professional liability insurance, the cost of defence and settlement fees will be covered.
Omissions in Professional Work/Service
In contrast to errors, “omissions” occur when key parts of the work have been left undone, resulting in negative consequences.
Incomplete design schematics, designs that don’t have necessary safety features, negligent construction management, and the like are classified as omissions. Similar to errors, omissions can result in project delays, redone work, and wasted materials.
When lawsuits arise from such incidents, professional liability insurance covers the cost of defence and settlements related to the incident.
Who Can Benefit From Professional Liability Coverage?
Professional liability insurance is vital if:
- The designs or schematics you create can result in major financial losses if they are erroneous or lacking;
- A mistake in your advice or decisions can cause project delays; or
- You directly handle projects and are responsible for meeting the timeline.
Because of the above qualifiers, professional liability insurance is recommended for the following professions and entities in the construction industry:
- Civil engineers;
- Electrical engineers;
- Engineering firms;
- Architectural firms;
- Urban designers;
- Construction accountants; and
- Construction project managers.
Why Ontario Professionals Need Professional Liability Insurance
Some professions in Ontario, like engineers and architects, are required to have professional liability insurance.
For other professions in the construction industry that are not legally required to have E&O insurance, it would still be beneficial to get this insurance, especially if they make high-stake decisions or play a hands-on role where delays could be charged against them.
For such professions, getting E&O insurance gives the added benefit of securing client trust.
Professional Liability Claims Examples
Claims Example #1
The drawings prepared by an architect lacked the safety features needed for the design. The house had already begun construction, but now, the walls need to be demolished and rebuilt.
The client sued and won. Professional liability insurance will cover the legal defences and settlements, which in this specific example, totals $54,000.
Claims Example #2
The engineer of a building made a mistake in recommending the best material for a support structure of an outdoor roof, resulting in the collapse of the structure. The outdoor roof needs to be rebuilt.
The client sued and won. Professional liability insurance covers the costs of legal defence and the settlement. In this example, professional liability insurance will cover a total of $20,000.
Claims Example #3
A construction project manager is wrongfully accused of causing the delay of a construction project. The client claims the delay has resulted in additional expenses amounting to $100,000 and that the project manager is responsible.
The project manager was ultimately not found responsible for the delays, but professional liability insurance still covered the defence costs totalling $10,000.
Leading Provider Of Professional Liability Insurance In Ontario
Contractors Insurance sets the bar high when it comes to the benefits we offer.
Personalized Insurance Plans
Pay for the coverage you really need based on personalized risk assessments. Say goodbye to costly and unnecessary riders.
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Get to know your insurance plan just as well as we do. Learn all about the plan’s coverage, limitations, and exclusions.
Thorough and Straightforward Insurance Education
Contractors Insurance is your partner in making the most informed decisions about your business or professional insurance. Our experts are always here to share their insights in a straightforward and jargon-free manner.
Frequently Asked Questions About Professional Liability Insurance
The cost of professional liability insurance depends on the provider and the industry of the insured. The average cost of this insurance type is $60 to $100 per month.
General liability insurance is for covering injuries or property damage inflicted on third-party individuals. Meanwhile, professional liability insurance covers financial loss from errors or omissions.
Although both insurance types can be triggered by a mistake or miscalculation, they cover entirely different types of damage.
Professional liability insurance is often described to cover settlement fees when there are claims against a professional service done. Generally, this includes the cost of redoing work.
Ready to Get the Coverage You Need?
Contractors Insurance is one of the leading insurance brokerage firms in Toronto. We specialize in providing insurance plans for contractors, engineers, architects, accountants, and more.
Our tailor-fit insurance programs are reliable because they are based on careful risk assessment.
Whether you need a standalone professional liability insurance or an insurance bundle for your small business or firm, our team is here to help!
Contact us today to get a quote!