Eight Key insurance Concepts
Professional Liability Insurance (PLI) is a fundamental part of practising architecture in Ontario. It protects architects and their firms when claims arise alleging an error, omission, or negligent act in the provision of professional services. This quick guide in Eight Steps is intended to help Certificate of Practice holders understand how professional liability insurance works and how to read their policy with greater confidence.
Step 1: Understand What Professional Liability Insurance Is Designed to Do
Insurance is a contract between an insurance company and a policyholder. Professional Liability Insurance responds when a claim is made against an architect or their architectural practice related to professional services. When this happens, the insurer has three primary obligations:
- Pay damages, when they are legally owed, up to the limits of the policy
- Provide a legal defence to the insured architect
- Pay supplementary costs, including claims expenses
Claims can arise years after a project is completed and often involve multiple parties. Even when allegations are unfounded, legal defence is still required. Professional liability insurance ensures architects are protected from both the cost and complexity of this process.
What this means for you:
Your insurance is not only about paying damages—it is equally about ensuring you have legal support when a claim arises.
Step 2: Know How Defence Costs Are Treated
Defending a professional liability claim can be expensive. Legal counsel, expert witnesses, and investigations are often required. Under Pro‑Demnity policies, defence costs are paid in addition to the limits available to pay damages (with limited exceptions).
Why this matters:
When defence costs are included within limits, they reduce the funds available to pay damages. Under Pro‑Demnity’s structure, defence costs do not erode the amount available for damages, helping preserve coverage when it is needed most. This is a valuable feature for policyholders, setting Pro-Demnity apart from most other insurers. Always refer to the specific terms and conditions in your policy for the details applicable to your architectural practice.
Step 3: Understand Who IS Insured (and Who is not)
The Named Insured on a professional liability policy is the holder of a Certificate of Practice. This may be an individual architect, a partnership, or a corporation. Coverage also extends to individuals working on behalf of the practice, including:
- current or former employees
- partners, directors, officers, and shareholders
- individuals retained under personal services agreements
Coverage applies when actions are taken within the scope of professional duties for the practice.
It is important to note that clients cannot be insured under an architectural practice’s policy.
The architect’s professional liability insurance provides coverage respecting damages arising from errors, omissions or negligent acts “in the provision of professional services to others”. A client is not providing the professional services that are the subject of the insurance. Instead, a client is the “others” who receive the services. A client is also the entity most likely to pursue damages covered by the architect’s professional liability policy and would therefore have a conflict if it were one of those insured. Accordingly, it is not appropriate to add a client as an insured under an architect’s professional liability insurance policy.
This is different from other types of insurance such as Comprehensive General Liability (CGL) where it may be appropriate and possible to have a client added as an insured on an architect’s CGL policy. An architect should consult its insurance broker if such a request arises.
What this means for you:
Professional liability insurance is structured to reflect how architectural services are actually delivered—collaboratively and across a practice.
Step 4: Learn the Difference Between Coverage and Limits
“Coverage” and “limits” are related, but they are not the same.
- Coverage defines what types of claims the policy responds to (i.e. allegations of error, omission or negligence in the performance of professional services)
- Limits define how much money is available to pay damages when coverage applies
If a claim falls outside the policy’s coverage, the limits do not apply at all. This is why much of the policy wording is focused on clearly defining what is covered and what is excluded.
Three (3) levels of mandatory limits apply, depending on gross fees received and reported by the practice for the prior year.
| Total Gross Fees | Claim Limit | Project Limit | Aggregate Limit |
| $0 – $499,999 | $250,000 | $500,000 | $1,000,000 |
| $500,000 – $999,999 | $500,000 | $1,000,000 | $2,000,000 |
| $1,000,000 and above | $1,000,000 | $2,000,000 | $4,000,000 |
Claim Limit is the maximum amount the Insurer will pay as Damages for each Claim during the Period of Insurance.
Project Limit is the maximum amount the Insurer will pay as Damages for all Claims during the Period of Insurance arising from the performance of professional services with respect to one project, subject always to the Claim Limit of Liability for one Claim.
Aggregate Limit is the maximum amount the Insurer will pay as Damages for all Claims during the Period of Insurance, subject always to the Claim Limit of Liability for one Claim and the Project Limit of Liability for all Claims with respect to one project.
Instructional tip:
When reviewing your policy, start by understanding coverage first—limits only matter once coverage applies.
Step 5: Pay Attention to Exclusions and Policy Wordings
All professional liability policies include exclusions. While many exclusions are common across insurers, wording and endorsements can vary. Insurers may also include technical requirements or conditions that must be met for coverage to apply. This is true of Pro-Demnity, where water ingress is an exclusion, however, coverage may apply when certain designs comply with our Technical Requirements Schedule.
Why this matters:
In the event of a claim, it is the policy wording itself—not general expectations—that determines how coverage responds.
Step 6: Understand Claims‑Made Insurance
Professional Liability Insurance is written on a claims‑made basis. This means the policy in effect when a claim is made and reported is the policy that responds, not the policy that was in place when the work was performed.
Policies are issued for a defined policy period, typically one year. The applicable dates are shown on the Declarations Page or Evidence of Insurance.
What this means for you:
Maintaining continuous coverage is essential. Gaps or misunderstandings about policy periods can affect how claims are handled. Learn more about Claims-Made Insurance.
Step 7: Review Your Policy Regularly
Professional liability insurance is not a one‑time purchase—it is an active part of managing professional risk. Reviewing your policy helps you understand:
- how defence costs are treated
- how limits apply
- what exclusions exist
- how claims‑made coverage works
Step 8: Understand Your Obligations to Notify Your Insurer in the Event of a Claim
The policy provides a formal definition of a claim. In simple terms, a claim contains some allegation of professional wrongdoing related to your usual and customary services as an architect, the wrongdoing is claimed to have resulted in damages suffered by a third party and there is request or demand for a restitution.
It is important that a claim or potential claim be reported immediately if you:
- have been advised of a claim
- are aware of a potential error or allegation that could reasonably lead to a claim (read more about Claims Identification for how to recognize a potential claim)
- or your practice are aware of a lawsuit or legal proceeding seeking damages for a loss from a project for which you provided architectural services
What this means for you:
Reporting a claim (or potential claim) is one of several Obligations as a Pro-Demnity policyholder. Be sure to familiarize yourself with these. Every claim is reviewed on a confidential case-by-case basis. Pro-Demity’s Claims and Legal team will swing into action to protect and defend the architect, upholding our Obligation as the Insurer.
We’re here to help
Professional Liability Insurance is a critical tool for protecting your practice. We encourage architects to read their insurance policy carefully and become familiar with its key terms and provisions. If there is any discrepancy between this summary and your policy, your policy terms and conditions prevail. If you have questions about how your coverage applies—or if something is unclear—contact Pro‑Demnity. We’re here to help you understand your insurance and support you as a trusted professional ally.