Errors and omissions insurance in Ontario

E&O insurance, also called professional liability insurance, helps protect a business or professional against eligible claims alleging that an error, omission, missed deadline, incorrect advice, flawed work, or failure to deliver caused a client financial loss.

It is designed for professional services and advice-based businesses, where the main claim may be economic loss rather than bodily injury or physical property damage.

Yes. E&O insurance and professional liability insurance generally refer to the same type of coverage. Some industries use “errors and omissions,” while others use “professional liability,” but both describe coverage for claims tied to professional work, advice, service errors, or omissions.

E&O insurance can be important for accountants, consultants, architects, engineers, IT firms, marketing agencies, designers, bookkeepers, mortgage professionals, real estate professionals, HR consultants, business advisors, health and wellness providers, and other businesses that provide advice or services.

If a client could allege that your work, recommendation, design, filing, service, or advice caused financial loss, E&O should be reviewed.

It depends on the profession and the contract. Some regulated professions may be required to carry E&O or professional liability insurance by a regulator, licensing body, professional association, or governing framework. In other cases, clients, government contracts, lenders, vendors, or project owners may require E&O before work begins.

Even when it is not mandatory, E&O can be important for any business that provides professional services or advice.

E&O insurance can help cover eligible defence costs, settlements, or damages arising from claims of professional negligence, errors, omissions, missed deadlines, failure to deliver, incorrect advice, breach of professional duty, loss of documents, or certain allegations tied to professional services.

Coverage depends on the policy wording, profession, exclusions, limits, retroactive date, and how the claim is reported.

General liability helps cover bodily injury and physical property damage claims. E&O helps cover financial loss claims tied to professional work, advice, or service mistakes.

For example, a client slipping in your office would usually be a general liability issue. A client alleging your advice, design, filing, software, campaign, or consulting work caused financial loss would usually be an E&O issue.

Most E&O policies are claims-made. That means the policy that responds is usually the one in force when the claim is made and reported, not necessarily the policy in force when the work was performed.

This makes continuous coverage important. A lapse, cancelled policy, changed retroactive date, or missing tail coverage can create a gap for past work.

A retroactive date is the date after which work may be eligible for coverage, assuming the claim is made and reported during the policy period and meets the policy terms.

If a claim arises from work performed before the retroactive date, the policy may not respond. Firms should review the retroactive date carefully when switching insurers, changing policies, or buying E&O for the first time.

Tail coverage, also called an extended reporting period, gives the insured extra time to report claims after a claims-made policy ends. It does not usually extend coverage for new work. It extends the reporting window for eligible past work.

Tail coverage can matter when a professional retires, sells a firm, closes a business, merges with another firm, or switches insurers.

They can. Some E&O policies include defence costs inside the limit, meaning legal costs reduce the amount left for settlement or damages. Other policies may provide defence costs outside the limit or use a different structure.

This should be reviewed before purchase because defence costs can become one of the largest parts of an E&O claim.

Yes, if the claim is covered by the policy. One of the most valuable parts of E&O coverage is legal defence. A professional negligence allegation does not have to be true to be expensive, disruptive, and time-consuming.

E&O can help pay eligible defence costs even when the claim is groundless.

It depends on the policy and the nature of the claim. Some E&O policies may respond to allegations involving breach of professional duty, failure to deliver, or negligent performance of professional services. Pure contractual disputes, guarantees, penalties, or obligations beyond the professional standard may be limited or excluded.

Professional firms should review contracts, indemnity clauses, limitation-of-liability wording, and insurance requirements before signing.

It depends on the policy and the contract. A client may still bring a claim against your firm for work performed by a subcontractor, freelancer, or downstream service provider.

Firms should review whether subcontracted work is included, whether subcontractors need their own E&O, and whether contracts require proof of insurance, indemnity, or additional protections.

Not always. Some E&O policies may include limited coverage for data loss, technology errors, or privacy-related claims, while others exclude or limit cyber events. Firms that hold client data, deliver technology services, or rely on digital systems should review E&O and cyber coverage together.

Cyber insurance may be needed for breach response, ransomware, notification, privacy liability, data restoration, and cyber business interruption.

It can, if regulatory or disciplinary defence coverage is included. This may help with eligible legal costs tied to a complaint, investigation, or proceeding by a regulator, licensing body, or professional association.

This coverage can be especially important for regulated professionals.

E&O policies vary, but common exclusions may include bodily injury, physical property damage, intentional wrongdoing, fraud, criminal acts, known prior claims, claims before the retroactive date, employment disputes, cyber incidents, and contractual penalties or guarantees.

The exclusions should be reviewed based on the actual profession and services provided.

The right limit depends on the profession, revenue, contract size, client requirements, regulatory requirements, project size, potential financial loss, defence costs, and whether the firm works with large clients, government contracts, or high-risk deliverables.

A consultant, accountant, engineer, IT firm, marketing agency, designer, or bookkeeper may each need different limits.

The cost of E&O insurance depends on:

• Profession and services provided
• Annual revenue and contract size
• Client type and project complexity
• Coverage limits and deductible
• Retroactive date and prior acts coverage
• Defence cost structure
• Regulatory or disciplinary defence needs
• Cyber/privacy exposure
• Subcontractor use
• Claims history and years of experience

Coverage should match the work your firm actually performs, not a generic professional services template.