Errors & Omissions Insurance
Errors and Omissions Insurance provides a legal defense for any member in the event that a claim (i.e for bodily injury, property damage or economic loss) is made against them for loss or damage arising from a wrongful act of a professional nature. The test at law is that the member may have done something or failed to do something that other professionals within their field would consider wrong. In this case insurance will only protect the member if the error or omission is related to a situation that required the exercise of their professional knowledge or skill.
It is important to understand that when selecting a limit for Errors and Omission Insurance there are a few things to consider;
- Your personal net worth- if your aggregate and/or per claim limit is insufficient your assets could be exposed.
- Your client’s expectations or requirements- if you engage in a contract to provide a certain limit you must do so. If your client expects higher limits you may lose out on future employment opportunities.
- Have a written contract- It is recommended that all members use a written contract with their clients. ASTTBC also recommends that any contract agreed between two parties’ clearly define liabilities in time, amount and possibly arbitration provisions. Your insurance should be adequate in relation to your written contract limitation.
Commercial General Liability Insurance
Commercial General Liability Insurance provides a legal defense for any member in the event that a claim (i.e for bodily injury, property damage or economic loss) is made against them for loss or damage arising from a wrongful act that did not require the exercise of their professional knowledge or skill. This is the type of error that could be made by any ordinary person or business. It will protect you from damages to a third party, for medical expenses accruing for an underlying incident, for the cost of defending lawsuits including investigations and settlements, and for any bonds or judgments required during an appeal procedure. Under this type of insurance, members are protected anywhere in North America.
The term, “commercial” in the title of the policy simply refers to the fact that the policy insures your business activities, the practice of your profession and your work.
Commercial General Liability Insurance covers your legal liability for any claim that is made against you that did not require your professional knowledge or skill. Errors and Omission Insurance on the other hand insures the member against any liability as a result of their failure to exercise his or her professional knowledge or skill. It is important to note that if the member is practicing outside the limits of their ASTTBC designation there is a risk neither policy will cover their claim. Therefore, it is up to the member to make sure they are practicing within their qualified area of expertise.
ASTTBC suggest that its members buy insurance through Encon to avoid any additional fees or hassle. If the member were to purchase insurance from two companies, there is a risk that each will assert that the other policy should respond to their claim, which may incur additional costs for the member.
There are several reasons as to why ASTTBC charges an administrative fee:
- ASTTBC negotiates with the insurer through Willis Canada. These negotiations take time and resources.
- The coverage provided through this group arrangement matches the needs of the various disciplines and technical specialist functions as a result of shared understanding of the scope of practice of ASTTBC members. Again, the dialogue between ASTTBC and Willis is ongoing and takes staff time.
- ASTTBC provides training and risk management resources and seminars to insured members often at no cost to help members manage their exposure.
- The cost of insurance for ASTTBC members is less than costs through other providers, therefore ASTTBC members save overall.
- ASTTBC members have the liberty of comparing insurance costs and coverage plans with other firms. The cost of insurance compared to the protection or coverage available through the ASTTBC program is equal to or better than what is available from other brokers or insurance companies.
- Retired members benefit from the continued Errors and Omissions coverage at no cost, as long as they were insured through ASTTBC during their working careers. This is a significant advantage for anyone who is approaching or considering retirement. Administrative costs are incurred by ASTTBC to help manage the post-retirement benefit.
- The policy wording has been tailored to meet the needs of ASTTBC members.
Premium financing is a loan from a financial institution that is secured on your policy. The financial institution charges interest on this loan, and if payments are not made on time they may charge penalties. This financial institution is an independent organization, it is neither owned by Willis, Encon or ASTTBC. Typically this institution will expect an up front payment deposit before confirming the contract. They will then draw directly from your nominated bank account monthly or on such other terms as you agree. Once the preliminaries are satisfied the financial institution pays your entire premium on your behalf.
When you enter into a contract with this financial institution, you should read the contract carefully as it will be binding to you. Typically the contract will grant the financial institution a limited power of attorney to cancel coverage on your behalf if you do not pay. The contract also provides an assignment of any return premiums to them. The financial institution retains the right to pursue you if there is a shortfall between the amounts they paid, any penalties and the return premium. Only payment of the premium due will prevent Encon from cancelling your coverage, and therefor it is crucial to ensure all of your preliminary obligations under the contract are complied with. This financial institution is your agent and therefore you must ensure that both parties fulfilled their sides of the contract. Neither Encon, Willis nor ASTTBC can involve itself in any negotiations with the financial institution, as it is a contract between you and them.
The warning notice is intended to assist you. It is important to understand that you are only insured for your work within your qualifications, and ASTTBC can confirm if you have any doubts. If you are concerned about this notice you should discuss your work with ASTTBC and ask them for a letter confirming your work is within your qualifications.
Lapsing Coverage / Retirement
If you have decided to lapse your insurance, there are certain things you are going to need to be aware of. This is a "claims made" policy, so unless there are special circumstances, all coverage will end May 1st of the calendar year. Any claim made after May 1st will be invalid, as well as any claim arising from a wrongful act committed prior to May 1st unless:
- You have been notified of a claim, which can be defined as an allegation that you caused financial loss, and identifies the amount of the damages. Claims should be reported immediately.
- You have not received a claim but are aware of a “circumstance.” This is defined as a complaint regarding your services but without identifying the damages or the monetary amount sought. Any such circumstance must be reported prior to May 1st with as many details as you have. This will trigger an extension of coverage for this particular allegation.
- At your option, you can purchase discovery insurance. Your policy will continue to apply with respect to your prior acts. This extension is usually purchased for a period of 1, 2 or 3 years. It will not apply after May 1st but will continue coverage for any wrongful act prior to May 1st.
Under the ASTTBC Insurance Program you are able to maintain insurance coverage with the "Retired" membership status from ASTTBC. However, the following should be noted:
- Obtain retired membership status through ASTTBC.
- Provide Willis Canada Inc. with written notice of retirement. When received, please also provide confirmation of ASTTBC retirement membership.
- Cease to do ANY professional work, including any work done as a personal favor or donated for free to a charity, not-for-profit organization or ASTTBC. Any such work will not be insured.
- This policy continues to cover you into retirement; therefore you must retain a copy of the last policy issued as proof of coverage. If your retirement falls mid-term through the policy period (program renewal is May 1st of each calendar year) your coverage will not be cancelled.
- Your last policy is converted to your retirement policy. There will be no future renewals and premiums unless you come out of retirement and apply for cover on a semi-retired or full-time basis.
As a Semi-Retired member where you intend to continue working for a fee or volunteer your services, you will be required to submit a new application and a revised premium will be quoted to you. You may be eligible to a discount depending on the level of your fees.