Mandatory business insurance requirements against associated professional risks are governed by provincial law or regulation, municipal by-laws, or the licensing body of your profession or trade. Depending on your line of work within a professional business or healthcare industries, you could be required to maintain a specified type and amount of insurance coverage. 

Having adequate business insurance is essential to protect clients and the general public, says Rob de Pruis, National Director of Consumer & Industry Relations at the Insurance Bureau of Canada. Without insurance, many professionals and businesses would lack sufficient funds to cover damages from their mistakes or negligence to third parties. Many contracts prescribe business or professional insurance coverage even where there aren’t mandatory coverage rules.

Not every business or professional operates with required insurance when performing their work. “Some people [professionals] avoid it to reduce their costs or to direct the funds to something else,” says de Pruis. “But sometimes it’s because their policy expired due to a simple oversight,” such as forgetting to renew an annual policy or failing to inform their insurer about important changes in the individual’s or organization’s work.

Determining the insurance coverage you should have depends on the risks you or your business are exposed to—which you can assess with assistance from an insurance advisor. Mandatory insurance cover you must have in the province depends on a few key factors, such as your specific industry or profession, location, and number of employees.

Rates.ca presents this guide to mandatory business insurance for business and healthcare professionals in Ontario. Note that beyond the coverages outlined below, most businesses with employees require workplace insurance (or workers’ compensation) provided by the Workplace Safety and Insurance Board.

Read more: Do I need business insurance if I already have WSIB in Ontario?

What is the basic insurance business professionals require?

If you’re someone who provides professional services or advice for a living—such as a lawyer, accountant, or insurance broker—you must at least carry errors and omissions liability insurance. Commonly referred to as E&O, it’s a type of professional liability insurance that covers insured when their mistakes cause financial losses to a third party, such as a customer. E&O policies don’t usually cover property damage or bodily injury, although they can.

But E&O coverage doesn’t allow you to direct your insurer to make the client whole out of the goodness of your heart. “The important thing with all liability coverage is that it only kicks in if you’re sued for professional negligence,” says Gordon Allen, Rates.ca commercial insurance expert and licensed insurance broker. Typically, E&O covers legal fees in addition to the cost of the settlement or court judgment.

Insurance mandates for business professionals are typically set by their respective licensing or regulatory bodies, which are governed by provincial law. Sometimes, these bodies work directly with insurers to create and market a standardized policy rather than allowing members of a profession to shop around.

What are mandatory insurance requirements for select business professionals?

Here are the key insurance mandates for select business professions:

Lawyers: The Law Society of Ontario requires lawyers and paralegals to carry professional liability insurance with coverage of at least $1 million per claim and $2 million aggregate. Exemptions apply to some practitioners, such as in-house counsel and government lawyers. The mandatory insurance package is sold by Lawyers’ Professional Indemnity Company (LAWPRO).

Accountants: All accounting firms that provide accounting services to the public or perform public accounting must have professional liability insurance. Minimum coverage is based on size, starting with $1 million for a one-person firm. Deductibles must be “reasonable” relative to the annual revenue of the firm. The same coverage is needed for individuals to practise with the Chartered Professional Accountant designation, unless they are covered by their firm. 

Insurance brokers: Registered Insurance Brokers of Ontario (RIBO), which licenses brokers and brokerages in the province, requires brokerages to maintain E&O coverage of at least $3 million per claim and $6 million aggregate, plus a fidelity bond of at least $100,000 per claim. Individual brokers are covered by their brokerage’s policy. 

Real estate brokers and agents: The Real Estate Council of Ontario (RECO) is the provincial regulator that regulates real estate agents, brokers, and brokerages in Ontario. RECO also administers the mandatory insurance that individual agents and brokers must buy, which includes the following:

• Professional liability insurance: $1 million per claim and $3 million for all claims in a policy year.
• Deposit insurance: $100,000 per claim and $1,000,000 for all claims arising from the same incident.
• Commission insurance: $100,000 per claim and $1,000,000 for all claims arising from the same incident.

Mortgage brokers: The Financial Services Regulatory Authority of Ontario (FSRA) requires all mortgage brokerages and administrators to carry E&O insurance with extended coverage for fraudulent acts, with minimum coverage of $500,000 per occurrence and $1 million annually. The insurance must be acquired from an FSRA-approved carrier.

Comparative breakdown of insurance required by various types of businesses:

What insurance must healthcare professionals carry?

Most healthcare professionals in Ontario must carry professional liability insurance as their errors can cause patients great physical and financial distress.

In the healthcare context, professional liability insurance is sometimes called medical malpractice or healthcare professional liability insurance. It typically indemnifies a healthcare worker when they provide substandard care that results in a wide range of damages to a patient, such as financial loss, bodily injury, or pain and suffering.

Some healthcare scenarios typically covered by professional liability insurance include:

• A nurse gives wrong medication to a patient, causing the patient’s death.
• A surgeon provides inadequate post-operative instructions to a patient, resulting in serious infection and further injury.
• A patient blames a chiropractor’s treatment for causing a nerve injury that requires additional treatment.

Licensing bodies determine minimum insurance requirements for their respective professions and may market standardized insurance policies to their members in partnership with individual insurers.

Required insurance coverages for common healthcare roles include:

Doctors: In Ontario, where all physicians are self-employed, the College of Physicians and Surgeons (CPSO) of Ontario requires all practicing medical doctors to have at least $10 million in professional liability coverage. They can acquire this in three ways:

• Obtain it from an insurer licensed to do business in Ontario
• Have a membership in the Canadian Medical Protective Association (CMPA)
• Get coverage under Government of Canada’s Treasury Board Policy on Legal Assistance and Indemnification

Typically, doctors who work in hospitals are not covered by the institution’s liability insurance.

Nurses: The College of Nurses of Ontario (CNO) requires registered nurses (RNs), registered practical nurses (RPNs) and nurse practitioners (NPs), also known as Extended Class nurses, to have professional liability protection. The minimum coverage is $5 million per claim for NPs and $1 million for all other classes of practicing nurses. This applies to anyone licensed to practise nursing, even if they work exclusively in non-clinical roles. Most nurses, however, don’t need to acquire or pay for this insurance directly because they are covered by their employer’s policy. 

Physiotherapists: Any practising physiotherapist must have professional liability coverage of at least $5 million, both per year and per incident, with no deductible. The policy must also provide at least 10 years of “tail insurance,” which applies to claims made against a physiotherapist after they’ve stopped practising. Although most hospitals and private physiotherapy clinics have professional liability policies covering their employees, individual physiotherapists should confirm such coverage is in place wherever they practise—especially if they work in multiple locations.

Chiropractors: As per the College of Chiropractors on Ontario, practising chiropractors must have professional liability coverage of at least $5 million per occurrence and no less than $5 million per year, plus tail coverage for claims made against them after they’ve left practice for incidents that occurred when they were practising. 

Psychologists: All psychologists practising in Ontario must have at least $2 million in professional liability coverage with no deductible, as required by the College of Psychologists of Ontario.

Comparative breakdown of insurance required by various types of healthcare professionals: