Methodology for our Awards
Determining Canada's top insurance products takes a keen understanding of the market offerings – that is why IBC has enlisted the help of thousands of brokers to determine the 2021 Product Awards. Our research team started with one-on-one interviews with the industry's most elite brokers, followed by surveying thousands of brokers within IBA’s network. Throughout the fifteen-week research process, carriers were measured on the strength of their relationships with brokers, ability to handle claims, underwriting expertise and, most importantly, the strength of the individual products they provide.
What is professional liability insurance?
Professional liability insurance, also known as errors and omissions (E&O) insurance, is designed to protect individuals and companies against financial losses stemming from claims of misrepresentation, negligence, and inaccurate advice made by a client. This type of policy typically covers legal expenses incurred from litigation, settlement, and punitive damages as part of the lawsuit.
The cost of the policy is often determined by several factors, including the nature of a business, geographical location, level of risk exposure, and previous claims that have been paid out.
Depending on the contract, professional liability insurance may provide cover for temporary employees, claims resulting from events before the policy was in force, or claims in different jurisdictions. However, most policies do not protect against costs stemming from criminal prosecution and liabilities arising from civil lawsuits.
Cyber liability coverage, which includes data breach and other technology issues, is not always part of the core policies of professional liability insurance, but some insurance companies offer coverage for data security and other technology-related issues as a separate policy.
Who needs professional liability insurance?
Professional liability coverage is considered a must-have for every business, especially those providing services. Professionals such as accountants, architects, contractors, designers, engineers, lawyers, medical and healthcare practitioners, and trade contractors all benefit from carrying professional liability or E&O insurance.
Professional liability policies protect professionals against claims made against them resulting from the advice and services that they provide. This type of insurance covers the costs incurred for defending legal actions and any damages that are needed to be paid.
Professional liability insurance is not always required by law for several service-based jobs, although some states require legal and medical professionals to carry malpractice insurance. However, this does not diminish the importance of having professional liability coverage.
What is the average cost of professional liability insurance?
The nature of the business, years of operation, where it is located, the number of employees, coverage limits, and claims that have been paid out previously are among the main cost determinants for professional liability insurance.
In general, small and medium-sized businesses pay around $600 to $1,800 annually for a professional liability policy. For jobs considered as low risk, the premiums are less expensive compared to those in professions with higher risk of exposure such as design, legal, and medical professionals. Additionally, a higher policy limit raises the average cost of the insurance.
What is the difference between professional liability and general liability insurance?
Both professional liability insurance and general liability insurance are designed to alleviate the financial burden stemming from claims made against a business, but the policies differ in the types of risks they cover.
Professional liability or errors and omissions insurance protects a business from financial losses incurred from claims resulting from the professional service that it provides. These include misrepresentation, negligence, inaccurate advice, and violation of good faith.
General liability coverage provides protection against claims of physical injury to people or damage to property arising from a business’ daily operations. These also include slip and fall incidents and advertising errors.
How to choose the right professional liability insurance for you
Professional liability insurance varies in coverage, key features and prices depending on the industry you are in. To find the right professional liability policies that suit your business, it is still best to talk to an experienced broker from a reputable insurance provider.