Get the Best Professional Liability Insurance for January 2023

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Defense costs and third-party indemnity
Financial losses
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Berkley is a large business insurer. It offers comprehensive professional liability coverage from $1 million up to $25 million. Highly recommended offer for businesses that need a flexible and customizable solution.Learn more
Property damage
Personal injuries (discrimination and harassment included)
Bodily injury
Chubb is the world's largest publicly traded property & casualty insurance company. It operates in 170+ countries. It's known for its efficiency and its comprehensive coverage. Best offer for international businesses.Learn more

Do you work or run a business in a field that may put you at risk of being liable for giving incorrect advice? Maybe you are a lawyer and find yourself having unknowingly provided wrong information to a client which puts you at risk to be sued by the client for misrepresentation. Or perhaps you are a physician and are accused of misdiagnosing a patient leading to a medical malpractice lawsuit.

These are just a few of many examples that business professionals in Canada can find themselves in when they least expect it. Mistakes can unfortunately happen. Ignored they can threaten both the financial security and reputation of your business. This is why professional liability insurance is so important for protecting you against potential claims from clients.

Our guide will deep dive into what professional liability insurance is, how it works, what it covers and why it is such a valuable asset for your business.

What is professional liability insurance?

Professional liability insurance (PLI) is a type of business insurance product that protects professionals such as accountants, lawyers and physicians against negligence and other claims initiated by their clients. Directors and officers can benefit from specific D&O insurance policies designed to cover them due to their greater exposure. Professional liability insurance fills in the gap not covered by general liability insurance policies which do not cover claims stemming from negligence, malpractice or misrepresentation.

Depending on your profession, professional liability insurance may have different names, such as medical malpractice insurance for the medical profession and errors and omissions insurance for real estate agents. These all still fall under the umbrella of professional liability insurance. It is important to note that professional liability insurance is a specialty coverage that is not provided under homeowners endorsements, in-home business policies or business-owners policies.

Generally, a professional liability policy will cover you or your business against a loss arising from any claim made during the policy period by reason of any covered error, omission or negligent act committed.

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What does professional liability insurance cover?

Professional liability insurance protects you against claims from a client that alleges a financial loss due to a service you provided, as well as lawsuits alleging negligence, misconduct and failure to deliver services as promised.

Professional liability insurance typically covers legal costs and damages for:

  • Coverage for negligent acts or errors or omissions related to your services, or failure to deliver a service as promised.
  • Coverage for product failure such as your product failing or injuring the client.
  • Media services result in your client getting sued for defamation, libel or slander.

For example, imagine you are an accountant who makes an administrative error, which results in your client owing a large amount of money in taxes. Your client could sue you for negligence. Having a professional liability policy in place would cover the legal expenses and monetary judgment placed against you.

What does professional liability insurance not cover?

While a professional liability insurance policy can cover a variety of unwelcome situations, there are certain coverages that it does not include such as:

  • Criminal prosecution
  • Criminal, dishonest or fraudulent acts
  • Violation of securities acts
  • Cost guarantees or price estimates
  • Incorrect estimates of profits or economic returns
  • All forms of legal liability under civil law
  • Cyber liability, covering data breaches and other technology issues

Good to know

Did you know you can get insurance that covers data security and other technology security-related issues? Find out how cyber insurance can help protect you.

What is the difference between general business liability insurance and professional liability insurance?

A general business liability policy protects the financial interests of businesses if they face lawsuits or any third-party claims. If the business was found legally liable for injuries or property damage caused by your product, or an accident on your premise, a business liability policy would cover any direct financial liabilities incurred, as well as any legal defence expenses in the event it led to a court case.

A professional liability insurance policy covers lawsuits alleging neglect, misconduct or failure to deliver services promised, whereas commercial general liability insurance covers third-party property damage or bodily injury.

Having both general business liability and professional liability insurance coverage forms a comprehensive insurance policy package for you and your business.

Do I need professional liability for my business?

While professional liability insurance is not mandatory for many professions in Canada, if you are in any of the following fields, it may be worth seriously considering a policy to protect yourself and the business.

  • Consultants
  • Accountants or auditors
  • Architects
  • Engineers
  • Insurance professionals
  • Real estate agents or brokers
  • Medical professionals
  • Self-employed entrepreneurs
  • Personal trainer
  • Copywriter

Good to know

It's always wise to check provincial insurance requirements for your profession. For example, if you are an accountant in Ontario, you are required to carry professional liability insurance in Ontario in order to practice.

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How much professional liability insurance do I need?

Professional liability insurance policy is something you probably need for your business, but you may be wondering how much liability insurance do you need for your business.

The most common professional liability coverage that business owners, consultants or practitioners opt for is the $1M/$2M coverage. This means a $1M max payout for a single claim during a year and a $2M max payout for all claims per year.

However, depending on how risky your business is, policy limits may vary. For example, if you are a marketing consultant, your job is not seen as risky so you may not need as high of a policy limit as some others. Whereas if you are a medical practitioner you would want a higher policy limit. Giving a misdiagnosis or an error could cause a patient lifelong harm. That risk comes with the profession, but could create problems that are very expensive to pay out of pocket, necessitating comprehensive insurance coverage.

If you believe risks are higher in your industry or for your specific business, you should consult with your broker about getting a policy with higher limits.

How much does professional liability insurance cost?

In Canada, a basic professional liability insurance policy with a limit of $100,000, you can anticipate spending as little as $250 annually.

However, just like with any insurance contract, there are a variety of factors that will be taken into consideration when determining the cost of your premium:

  • Industry and Services Offered
  • Years of Experience
  • Number of Employees
  • Annual and Projected Revenue

Contact your trusted broker or insurance agent to discuss your specific circumstances and your business requirements so they can help you determine the appropriate premium and coverage limits.

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Can I bundle professional liability insurance with other types of insurance for my business?

Bundling is common in the insurance industry. Talk to your insurance broker or advisor.

Many companies allow you to bundle small business insurance and save you money while providing coverage for a variety of situations. Talking to your broker or insurance company can potentially save you money and hassle by having multiple policies under one umbrella.

Imagine you are an accountant and wondering which insurance policies you may need for your business.

A general business insurance plan protects you from injuries that occur on your premises. For example, a client trips and falls sustaining a back injury while meeting with you to discuss their taxes. A professional liability insurance policy would cover lawsuits alleging negligence if you make an error resulting in your client owning a substantial amount of taxes. But you may also want cybersecurity insurance that will protect in you the event your data and your client's data from your computers get hacked.

Good to know

There are many types of insurance available that your business. Continue reading about business insurance coverages to be sure that you are prepared for any obstacle that your business may encounter.

What is the difference between professional liability insurance and errors and omissions insurance?

We have covered professional liability insurance extensively, but you may have also heard the term errors and omissions insurance and may be wondering if there is a difference between the two.

The answer is simple: they are the same.

Professional liability insurance is also often referred interchangeably to as errors and omissions (E&O) insurance, so both policies will provide the same coverage. Some insurance companies use different names interchangeably, so we recommend talking to your insurance broker about the specific coverages that come with your package.

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