Ontario professional liability insurance, which is also known as errors and omissions (E&O) insurance or malpractice insurance depending on the type of profession it is being applied to, is a type of business insurance coverage that offers financial protection against costs incurred by defending yourself and your professional service against allegations of professional negligence, inaccurate advice, wrongful business practices, breach of contract, errors or omissions, and conflict of interest.  

In the event that you have legal action brought against you for one of the reasons listed above, your professional liability insurance policy would prompt your insurance carrier to provide the necessary funds to cover expenses such as legal mediation, legal defence in court, settlement costs and potentially other related expenses as well, up to the coverage limit listed on your policy. Without this professional insurance coverage, even a simple mistake can lead to immense legal costs and settlement fees. However, with professional liability insurance, Ontario professionals are protected against claims of negligent acts or damages resulting from services or advice they provide. 

Like most forms of business insurance—with the obvious exception of commercial auto insurance—having professional liability insurance is not legally required by the Ontario government. However, many professionals are subject to professional liability coverage requirements in order to complete their registration with their professional associations, so in a practical sense, it is mandatory insurance coverage for those professions.  

For example, optometrists are required by the College of Optometrists of Ontario to hold professional liability insurance that meets specific minimum coverage limits and includes tail insurance. Some types of professionals may or may not be able to access professional liability insurance coverage through their professional association, or they will need to provide proof of insurance to their organization. 

Even if they're not required by a professional association to have professional liability insurance, Ontario professionals or businesses that provide design, consulting, advice or advocating services can't afford the risk of going without it. As anyone who has ever been involved in some type of litigation knows, the cost of legal services can easily exceed hundreds of thousands of dollars—and that's before legal settlements are added on to someone who has been found legally liable for professional negligence or other similar allegations. Most people simply don't have the funds available to pay out of pocket for those types of costs, and Ontario professional liability insurance gives the monetary protection necessary to avoid serious financial hardship.  

It's easy to think, "I have a great relationship with my clients, so I don't need to worry about professional liability," or "I'll just be really careful and it won't be a problem," but that's simply not a realistic expectation for businesses or professionals to have. Even the most cautious or conscientious person can't prevent every mistake or mishap that could lead to a professional liability claim, and claims can still be made even if you have done nothing wrong. So by having the right coverage for professional liability insurance, Ontario professionals can be protected against financial loss. 

No. Professional Liability Insurance covers professional negligence, errors, and bad advice. Commercial General Liability covers third-party property damage and bodily injury. Both are needed.

Yes. However, on certain policies defence costs are included within the limit of liability, meaning total available compensation is reduced by what is spent on defence. Punitive damages are excluded from some policies. Policy wording varies significantly.

Tail coverage extends your coverage period after retirement or policy cancellation. Professional liability is written on a claims-made basis, which means coverage must be active when a claim is made. Tail insurance covers claims made after the policy is cancelled for incidents that occurred during the policy period. Whether it is necessary varies by profession.

In some cases, yes, they can. Many employers or business owners in Ontario, especially larger institutional employers like hospitals or health authorities, have professional liability protection (PLP) in place to provide professional liability insurance coverage for their individual employees. However, as an employee, it is your job to make sure that your employer’s PLP meets any insurance requirements you are obligated to meet. Additionally, if you work for multiple employers, you will need to ensure that you have protection in place to ensure you are covered with professional liability insurance in all of your roles. 

To confirm whether your employer’s PLP meets your needed professional liability insurance requirements, request a copy of your PLP coverage or a detailed letter that includes the policy number, name of the insured, coverage details, and policy period from your employer or human resources department, and review it carefully. Compare the details of the policy against the requirements set by your profession’s regulatory board, which can typically be found on their website or in their organizational bylaw. If you have any questions about coverage, contact your regulatory board for further information about your professional liability insurance needs. 

Remember, while your employer may provide liability protection, it is ultimately up to you to ensure that any of your professional liability insurance needs are being met. If you have gaps in your coverage, speak with one of our liability insurance brokers about how you can close those gaps.