Professional Liability Insurance

What is Professional Liability Insurance?

Professional liability insurance protects against claims that arise from the acts, errors or omissions
made in the rendering of professional services. This is a vital form of coverage that protects against
financial losses resulting from lawsuits initiated by clients. These losses not only include damages
awarded for successful claims but also the legal costs of defending against these claims (successful or
not).
Professionals are expected to have extensive technical knowledge or training in their particular area of
expertise. They are also expected to perform their services according to standards of conduct set by
their profession. If they fail to use the degree of skill expected of them, they can be held liable for any
harm they cause as a result of this breach of standard.
The two most common types of law suits brought against professionals are:
1. negligence in the performance of services
2. breach of contract
Negligence suits, which are more frequently made, arise from damages sustained due to a
professionals failure to perform according to known standards of conduct for her or his profession.

Why do I need it?

Ask anyone involved in a court battle successful or not
about the costs involved
The Costs.
Ask anyone involved in a court battle about the escalating costs and unpredictable outcome of
litigation. Damage awards for breach of professional conduct can well exceed your companys annual
income and deliver a devastating blow to your business. Although formalizing a contract with your
clients can help limit your liability, the big expense in an errors and omissions claim is often the legal
defense needed to prove liability or innocence. Professional liability policies are designed to cover
many of these defense costs and ultimately the final judgement if you lose your case.
Mistakes Happen.
Everyone messes up at some point. You cant be everything to everyone all the time. Although youd
like to, sometimes you cant handle a job personally. You can obtain professional liability coverage to
insure not only your mistakes, but also the mistakes of the employees, ex-employees and independent
contractors you hire.
Dont Be Fooled.
Professional liability insurance is a specialty coverage. It is not provided under homeowners
endorsements, in-home business policies or business owners policies. Commercial general liability
does not provide coverage for errors, contract performance disputes or any other professional liability
issues. Companies that have general liability without professional liability insurance coverage - Errors
and Omissions - are taking a serious risk. Its like a doctor practising medicine without malpractice
insurance.

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Who needs it?

You may be operating under the assumption that you are not a Professional
but a Judge may order otherwise
Ask yourself the following questions:

Are you giving advice to clients?

Are you providing educated recommendations?
Do you have considerable experience in your field?
Are you proposing solutions based on your education and/or experience?
Are you providing technical advice or recommendations?
Are you holding yourself out as an expert in your field?

If you answered yes to any of these questions, you likely need professional liability
insurance.
The definition of a professional has expanded over the years to include those occupations in which
special knowledge, skills and close client relationships are paramount. In other words, you dont have
to work in one of the classic professions such as a lawyer or doctor to be found liable for professional
negligence.
This type of insurance may be appropriate for anyone who gives advice, makes educated
recommendations, designs solutions or represents the needs of others, such as teachers, consultants,
software developers, ad copywriters, Web page designers, placement services, telecommunication
carriers or inspectors.
Regardless of what kind of business you own, customers can claim that something you did on their
behalf was done incorrectly, and that this error cost them money or caused them harm in some way.
Dont wait for it to happen to you.

How does it work?

Policies are written on a claims made basis with a single aggregate limit of liability.
In Qubec, the policy must include coverage for defense costs these costs are paid over and above
all limits of insurance even if a suit proves to have no merit.
Claims examples:

A financial planner provides misguided information to his client regarding the clients retirement
planning. The client later realizes that his advisor inadequately set up his retirement program
and sues the planner for the financial loss he has suffered. The costs of any judgement
awarded against the financial planner as well as his defense costs are insurable under
professional liability insurance.
An advertising firm sends out a mailing on behalf of a bank. The mailing is sent out to the
wrong group of clients in error causing the need to reproduce the documents and re-send them
to the intended clients. The bank sues the firm for all related damages associated with the reprinting, re-mailing and time delay. The damages, including defense costs, are insurable under
professional liability insurance.
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A computer consultant poorly installs a clients computer network forcing the client to shut
down operations for three days while the computer network is repaired. The client sues the
computer consultant for faulty workmanship, business interruption and extra expense. All of
these damages, including defense costs, are potentially insurable under professional liability
insurance.
A notary inaccurately searches the deed on a new property and informs the client that there are
no liens on the property. The client relies on this information and later discovers that there is a
charge on the property. The client sues the notary for the cost of having the lien discharged.
The damages, including defense costs, are insurable under professional liability insurance.

How is the premium calculated?

The premium is usually determined based on the following factors:
the profession involved
the number of professionals or other employees, consultants, contractors covered
annual revenue
location of the business
the limit of liability and the deductible

Contact us for a no-obligation Consultation

To learn more about the Professional Liability Insurance coverage that will work for your
particular business needs, please contact our offices on a no-obligation basis, for a free,
personal consultation. We have a dedicated team of professional employees waiting to
serve you.

3400 de Maisonneuve W. Suite 1115

Montreal, Quebec

(514)481-0481

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