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Compare Errors and Omissions Insurance Quotes

Find the best errors and omissions insurance coverage in Canada at a great rate.

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Written By Jessica Mach

Freelance Writer
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Reviewed By Shivani Kaul
Content Manager

Updated

What is errors and omissions insurance?

Errors and omissions insurance is a type of coverage for businesses. It provides financial protection for a specific type of third-party claim: those that allege issues with the services the company provides.

Let’s say your business provides a client with professional advice. When your client follows the advice, they experience a serious disruption in their project, and come to believe your advice was not sound or based on accurate information. The client sues your business, alleging errors or omissions with your company’s consulting services. Errors or omissions insurance will pay for the legal fees associated with defending the lawsuit, as well as the damages the court awards to the client.

Commercial general liability insurance is another type of insurance that offers businesses broad financial protection from most types of third-party claims. However, it does not typically cover claims related to errors and omissions. Coverage for these types of claims must be purchased separately.

In some professions, this type of coverage is known as professional liability insurance.

What does errors and omissions insurance cover?

This type of insurance covers claims that your services involved or resulted in:

  • Financial loss
  • Misconduct
  • Errors
  • Omissions
  • Negligence

It also provides financial protection for claims alleging your company failed to deliver services.

For businesses that offer media or advertising services, errors and omissions insurance can cover claims that their services resulted in clients getting sued for defamation, libel, or slander.

Is errors and omissions insurance mandatory in Canada?

Errors and omissions insurance is not mandatory in Canada, unless you are in certain professions. Physicians, for example, are required in each province and territory to carry medical liability insurance, a specific type of errors and omissions insurance, in order to practice.

However, errors and omissions insurance is highly recommended for any business that provides services or advice to clients or consumers. Everyone makes mistakes. But getting hit with a lawsuit over an error could have a devastating impact on your business, your finances, and your employees. An errors and omissions insurance policy will significantly reduce your financial losses in the event a client pursues legal action.

Who needs errors and omissions insurance?

This type of coverage is critical if your business provides services or advice to clients. Examples of this type of business include:

  • Accounting firms
  • Law firms
  • Travel agency
  • Website development firms
  • Insurance brokerages
  • Engineering firms
  • Hair salons
  • Non-profit organizations
  • Pet grooming companies
  • Real estate firms

In some professions, this type of insurance is mandatory. Physicians in Canada, for example, are required to carry a variation of errors and omissions insurance, called medical liability insurance.

What is not covered by errors and omissions insurance?

Errors and omissions insurance does not cover claims related to:

  • Violations of securities laws
  • Price guarantees or estimates
  • Incorrect estimates of financial returns or profit

Other types of claims are not covered by errors and omissions insurance, but are covered by other kinds of insurance policies. These include claims related to:

  • Dishonest, fraudulent, or criminal acts: these types of claims are covered instead by crime insurance
  • Bodily injury or property damage: businesses can get coverage for these types of claims through public liability insurance or commercial general liability insurance
  • Employee injury: these claims are covered by employee liability insurance

How much does errors and omissions insurance cost?

The amount you pay for an errors and omissions insurance policy will depend on a variety of factors specific to your business. In general, however, you can expect to pay approximately $250 each year for a policy with a $100,000 limit.

Factors that affect your errors and omissions insurance rates

Insurance companies consider several factors to determine rates for errors and omissions coverage. These factors might include:

  • The services your business offers - Your insurance premium depends on the type of services your business provides. This directly impacts your insurance because the cost of rectifying an error or omission made by your business falls on the insurance company. The higher the potential cost, the greater the liability for the insurer. Therefore, the insurance company considers these potential costs when offering you a quote.
  • Your industry - Each industry has its own unique challenges. The more challenging your industry, the higher your insurance premium is likely to be. Essentially, the higher the stakes, the greater the liability for the insurance company.
  • Your annual and projected revenue - Insurers assess your projected revenue to understand your business's financial scope. This helps them gauge the potential risk and determine an appropriate premium.
  • How many years of experience you have in your industry - More experience generally means fewer mistakes, which can lower your insurance premium. Insurers view experienced professionals as lower risk.
  • The number of employees you have - A larger workforce can increase the likelihood of errors or omissions, potentially raising your insurance premium.
  • The size of your business - Larger businesses often face more complex risks, which can lead to higher insurance premiums. Insurers consider the overall scale and operations of your business when determining rates.

How errors and omissions can protect your business

  • Scenario 1: Hector owns an events company, Elegance Events Inc., which has been hired to produce a surprise 50th anniversary party. The clients are adamant that the party occurs on a specific date. Hector mistakenly books the venue for the wrong date, but by the time he discovers his error, he is unable to reschedule at the original venue or find an alternative location. The clients sue Hector, alleging his negligence led to the party’s cancellation. The court rules in the clients’ favour.

    Outcome: Hector’s errors and omissions insurance covers the legal fees associated with defending the lawsuit. The policy also covers the damages the court has awarded his clients, paying out $35,000 in total.
  • Scenario 2: Sam runs an advertising agency, Creative Spark Co. A startup hires the agency to come up with a campaign to advertise its services. Creative Spark creates a campaign that makes false allegations against the startup’s competitors, and the competitors sue the startup for defamation and libel. The startup, in turn, brings a lawsuit against Creative Spark. The court orders a trial to resolve the issue, and the jury renders a verdict in favour of the startup.

    Outcome: Sam’s errors and omissions insurance pays the legal expenses of defending Creative Spark at trial. The policy also pays the damages the court awards the startup. In total, the value of Sam’s insurance payout is $70,000 — an amount he would have had to pay out of pocket if he was not covered.
  • Scenario 3: Ashley’s real estate company, Beautiful Homes Co., is helping a client find a home. The client is looking for a property where she can build a laneway house, so she can rent it out for extra income in the future. One of Ashley’s rookie real estate agents assures the client that the property she is most interested in can accommodate a laneway house. The client purchases the property based on this information, and later discovers she cannot obtain a permit to build a laneway house. The client sues Beautiful Homes Co., alleging the company misled her. A court awards her damages.

    Outcome: Ashley’s errors and omissions insurance covers the legal costs of defending the client’s lawsuit in court. The policy additionally pays the client’s damages. The total payout from the insurance policy is $25,000 — an amount Ashley would have had to pay out of pocket otherwise.

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How to get the cheapest errors and omissions insurance quotes

Any errors and omissions insurance policy should be evaluated according to two criteria: whether it meets the unique needs of your business, and whether it’s priced at a competitive rate.

The best strategy for finding the right plan for your business is to compare quotes from a range of insurance companies. If that sounds overwhelming, or you don’t know where to start, don’t worry: here at RATESDOTCA, we’ve made it a priority to help you find the right plan in an easy, streamlined way.

Here’s how it works:

  • Tell us about your business by answering a few questions.
  • Compare quotes from different insurance companies side by side — free of charge.
  • Choose the right protection plan for your business.
  • Connect with the insurer and secure your policy.

Frequently Asked Questions about errors and omissions insurance

Have more questions? We got them answered...

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

Despite the different names, errors and omissions insurance and professional liability insurance refer to the same thing. Both offer the same coverage for businesses, providing financial protection for third-party claims related to the businesses’ services.

In some industries, you might hear the term “malpractice insurance.” That refers to the same type of coverage as well.

How do I determine the amount of errors and omissions insurance coverage I need?

The amount of errors and omissions insurance coverage you need depends on several factors. These include the size of your business, the line of work you’re in, and the types of risks that are common in your industry. Getting the right amount of coverage is important: while over-insuring can unnecessarily raise your premiums, underinsuring will limit your protection from financial losses if you face a third-party claim.

We recommend talking to an experienced broker to make sure you’re adequately protecting your business — while paying the fairest rate.

I have commercial general liability insurance, do I still need errors and omissions insurance?

In a word, yes. Commercial general liability insurance provides businesses with coverage when they face a broad range of third-party claims. These include bodily injury, property damage, advertising injury, product liability, and tenant’s legal liability claims. This type of insurance does not, however, cover third-party claims related to the services your business provides. That’s where errors and omissions insurance steps in.

If you’re still wondering whether you really need both types of coverage, consider the following scenario. Let’s say you own an accounting firm that frequently has clients meeting with accountants in-office. During one such meeting, an elderly client falls off a broken chair you’ve forgotten to throw out. The client seriously injures his back and sues your firm for bodily injury. Because you have commercial general liability insurance, your policy will cover the tens of thousands of dollars it costs to defend your company against the lawsuit.

Later that year, another client discovers your firm made a mistake on their tax return, resulting in a massive tax penalty. The client brings a lawsuit against your firm, alleging it is responsible for the mistake. Because you have errors and omissions insurance, your policy will pay the legal fees to defend your firm in court.

Here’s the lesson: if you believe your business is at risk of facing any of the claims covered by commercial general liability insurance or errors and omissions insurance, the safest bet is to get both.

Jessica Mach 3.JPG
Jessica Mach ,
Freelance Writer

Jessica Mach is a freelance writer for RATEDOTCA. She is Canada Editor - Law for Key Media’s legal publications, and previously reported on US labour policy for Law360, Law.com, and the Los Angeles Daily Journal. As an early member of LowestRates.ca's editorial team, she covered personal finance and astrology.
She graduated from McGill University with a Master of Arts degree in art history.

Experience
  • Business Loans
  • Personal Finance
Education
  • McGill University

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