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Professional Liability Insurance Canada

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What Type of Coverage do Small Business Owners Need?

Owning a small business in Canada is one of life's most exciting stages. While it can be challenging it times, it still remains an experience that has the potential to be incredibly rewarding down the road.

If you own a business, then you probably are already aware of the importance of being properly covered under insurance policies. In the event that you are not, we highly recommend that you read this article to familiarize yourself with the different options available to you.

As a small business owner, the first policy that you should look into-regardless of the size of your company-professional liability insurance policy.

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What Is The Difference Between
Professional Liability Insurance and Business Liability Insurance

There is no doubt Liability Insurance is critical for any small business owner to obtain, but it is also critical that as a business owner you understand exactly what coverage is included in your liability insurance policy. It is commonly believed that if you have liability coverage, your company is completely covered for all mishaps, incidents or unfortunate occurrences (including negligence). However you are probably only covered for typical accidents or mishaps that happen, on your property or wherever you are conducting business, to any employee or customer. It is not likely that you are covered for negligent incidents, mishaps or accidents that occur while performing the actual professional services.

If you only have Business Liability Insurance coverage (AKA: Commercial General Liability Insurance), that is probably the case. In order to protect yourself from accidents or negligence that may happen during or as a result of your professional services, you also need liability coverage called Professional Liability Insurance (AKA: Errors and Omissions Insurance). Below we describe and provide examples of both types of liability insurance coverage, so you are informed when purchasing your small business insurance policies.

Professional Liability Insurance/PLI

(Errors and Omissions Insurance)

These policies would cover

  • Flawed professional advice and services that may have resulted in financial loss to the customer or client.
  • Protects professional individuals or companies from responsibility of the full cost of defending against a negligence claim and damages awarded in such a civil lawsuit.
    • Professional liability insurance covers the costs of judgments, settlements and legal defense.
    • Damages paid under a professional liability policy are typically financial rather than physical.
  • In the medical profession, this type of coverage is referred to as malpractice insurance and is required by law.
  • Some of the types of professions that would need Professional Liability Insurance would be: insurance agents, consultants, brokers, lawyers, accounting firms, engineering firms, financial services, contractors or construction companies, plumbers, electricians, health professionals, etc.

Example

You own a small Law Practice, a local entrepreneur consults with you about their business endeavors, you provide legal advice. Later the entrepreneur claims your legal advice caused him to loose $100,000 in a bad business deal. This type of policy will help cover the lawsuit and any decided settlements.

Example

You own a carpet cleaning service and you have been appointed to clean all the carpets at a major retailer. One location claims the products your company used to clean the carpets left bleach stains throughout the store causing the store to close down and replace all the carpets. This type of policy will help cover the lawsuit for business interruption and lost profits, and any decided settlements.

Business Liability Insurance

(Commercial General Liability Insurance / CGL)

These policies would cover

  • Claims of bodily injury or other physical injury (to customer or employee) or property damage that may occur at your place of business or at other locations (included in your policy) where you normally conduct business.
  • The costs to defend or settle claims - even if the claims are fraudulent.
Please visit Bullfrog Insurance to quote and buy business liability insurance online.

Example

You own a small Law Practice and while in the waiting room of your office, a client burns their mouth on fresh hot coffee from the coffee machine resulting in a hospital visit to treat the burn. This policy would help cover the medical costs of your client and if the client sues your business for additional costs, such as lost wages (for being unable to attend work) this type of policy will help cover the legal costs too.

Example

You own a carpet cleaning service and you have been appointed to clean all the carpets at a major retailer. At one location your employee trips and falls dropping the carpet-cleaning machine onto a display case. This type of policy will help cover the cost to replace the display case and any medical treatment for your employee’s injury.

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I managed to complete the process online and got my policy. The process was super easy, thanks for providing such a nice and quick system.

SP. MBA, PMP

SAP Project Manager - Toronto