Celebrating 40 underwriting years

Pro‑Demnity’s story begins in 1987, during a time when Ontario architects were caught in a professional liability insurance crisis and at the mercy of a volatile commercial insurance market. To protect the profession’s ability to practise—and to keep insurance available, fair, and affordable—the Ontario Association of Architects (OAA) created the Indemnity Plan, a bold, profession‑led solution that ensured equitable coverage for every architectural practice in Ontario. What started with just two employees and the first policy issued in 1987 quickly proved its value: the Plan stabilised access to coverage, defended architects through claims, and ensured that insurance would never become a barrier to practice.

In 2003, the Indemnity Plan formally transitioned into Pro‑Demnity Insurance Company, preserving the founding purpose while establishing a regulated insurer dedicated exclusively to architects—one that remains wholly owned by the OAA, governed independently, and regulated by FSRA.

Over the decades, Pro‑Demnity has continued to evolve alongside the profession it serves. Key milestones include becoming a Lloyd’s Coverholder in 2005, introducing innovations such as the Disappearing Deductible, expanded optional limits, and the unique Retirement from Practice Program, and responding decisively during moments of change—from the COVID‑19 pandemic in 2020, when admin fees were reduced and instalment payments introduced, to major brand, service, and digital transformations in 2021 and beyond. Recent years have focused on strengthening affordability and experience through disciplined financial stewardship, expanded coverage guidance (including the Technical Requirements Schedule), and investments in modern tools—culminating in a 0% rate change for its 40th underwriting year and the launch of My Pro‑Demnity, a new online renewal and self‑service platform.

Through periods of economic uncertainty, regulatory change, and industry disruption, Pro‑Demnity has remained anchored in its original mandate: to protect architects’ work, defend their decisions, and ensure that professional liability insurance enables the practice of architecture in Ontario.

As Pro‑Demnity marks its 40th underwriting year and looks ahead to the future, this mandate remains unchanged.

40 reasons to celebrate Pro‑Demnity’s 40th underwriting year

Service, people, and the architect experience

1. People who genuinely care about helping architects practise with confidence
   Pro‑Demnity’s greatest strength is its people—architects, underwriters, legal professionals, and specialists who act as true allies.
2. Professional, courteous, and knowledgeable staff at every touchpoint
   From underwriting to claims to risk services, architects are supported with respect, clarity, and professionalism.
3. A service culture grounded in understanding architectural practice
   Pro‑Demnity is built around the realities of architectural work—not generic insurance assumptions.
4. A modernised underwriting platform focused on ease of doing business
   Ongoing investments in systems and processes are designed to make interactions simpler, clearer, and more efficient.
5. Clearer communications that reduce friction and uncertainty
   Plain‑language guidance, improved forms, and better digital tools help architects move forward with confidence.
6. In‑house expertise that supports architects before, during, and after claims
   Legal, claims, underwriting, and risk professionals work together to provide consistent, informed support.
7. Risk education and advisory services included as part of the relationship
   Guidance, insight, and education are core services—not add‑ons.
8. A long‑standing commitment to continuous service improvement
   Client feedback, process reviews, and technology investments drive meaningful enhancements over time.
9. A trusted ally —not a transactional insurer
   Pro‑Demnity’s role extends beyond policy issuance to advocacy, guidance, and defence.
10. An organisation shaped by collaboration across disciplines
    Architects, lawyers, and insurance professionals working together for better outcomes.

Affordability, fairness, and financial discipline

11. A 0% rate change for the 2026–2027 underwriting year
    A tangible reflection of disciplined financial management and operational strength.
12. Predictable, steady pricing approaches that support firm planning
13. Transparent premium calculations architects can understand
14. Expense and claims‑cost management as tools to reduce pressure on premiums
15. Reinsurance strategies designed to support long‑term stability
16. Fairer pricing through thoughtful use of claims experience
17. A focus on claims severity—not claim frequency—when assessing premium
18. Caps and guardrails that limit volatility
19. Operational efficiency as a driver of affordability
20. Affordability treated as a professional responsibility, not just a financial outcome

Why Pro‑Demnity exists (and still matters)

21. Created so insurance would never determine who gets to practise architecture
22. Born from the profession during the 1980s liability crisis
23. Equal and consistent protection for all Ontario architectural practices
24. A mandatory, profession‑led solution rooted in collective responsibility
25. One of the first architect‑specific indemnity models of its kind

Strength through governance, regulation, and expertise

26. Independent governance with an architect‑centred mandate
27. Regulated oversight that reinforces discipline and trust
28. A model that operates much like a mutual—putting policyholders first
29. Capital strength designed to withstand volatility and uncertainty
30. Long‑term stewardship over short‑term gains

Protection, defence, and professional confidence

31. Robust claims defence that protects professional judgement
32. Deep institutional knowledge built over decades of claims experience
33. Coverage structures that evolve with architectural risk
34. Technical guidance that helps architects design with coverage in mind
35. A proactive approach to risk that supports better outcomes

Looking forward—without losing sight of the past

36. Ongoing investment in digital tools that improve the architect experience
37. A workforce committed to serving architects—not just servicing policies
38. A culture of accountability, professionalism, and care
39. An organisation that evolves alongside the profession
40. Forty underwriting years of staying true to one purpose: championing architects

Both litigated and non-litigated claims focus on allegations of errors, omissions, or negligence against architects. We respond with a protect-and-defend mind-set and a vigorous defense.

The accompanying charts offer architectural practices with a clear, accessible view of open claims from 2025 broken down by project type, as well as by the nature and alleged cause of loss. This client-forward approach ensures greater transparency and empowers you with
meaningful insights to better understand your risk exposure and opportunities for improved outcomes.

• Multi‑dwelling residences account for the largest share of open claims by count, indicating frequent issues in higher‑density residential design work. The costs incurred are also substantial, making this segment both high frequency and material in impact.
• Residential (single‑family) has a meaningful portion of open claims with notable total incurred, suggesting recurring patterns (often workmanship and enclosure/water issues) that add up across many smaller projects.
• Education (universities/schools) shows a smaller share by count but high total incurred, implying higher severity per claim—complex programs and stakeholder environments tend to amplify costs when issues arise.

Typical Architectural Risk Exposures

The companion slides on Alleged Type & Cause of Loss reinforce the typical architectural exposure areas that drive claims.

Bottom line

Open claim dollars are concentrated in design decisions and how the design/contract is administered during construction, with schedule slippage frequently present in the loss narratives.

Pro-Demnity is proud to support the architectural profession as we collectively explore Collaboration Powering Innovation at the 2026 OAA Conference in Kitchener-Waterloo, Ontario. We are pleased to be a lead sponsor again this year.

The resources provided by Pro-Dmenity at this year’s conference offer valuable insights and tools to empower architects and their firms in their wise, efficient and effective management of risk.

Presentations

Over the years, coverage for water ingress claims has been expanded by Pro-Demnity to include Window Wall Systems, Pre-cast Concrete Panel Systems and Insulated Metal Panel Systems.

SL08: Design with Confidence: Understanding Pro-Demnity’s Technical Requirements Schedule and the Technical Requirements Checklist
Presenter: John Hackett, OAA (Ret), Executive Advisor alongside contributors David Kayll and Howard Tuchman

Presentation Description:
Each year, architects face claims of design-related water ingress. But is the design (and the architect) to be blamed? This session demystifies Pro-Demnity’s Technical Requirements Schedule and helps architects gain a better understanding of how to design precast concrete and window wall systems (and more!) in a manner that ensures coverage for claims related to water ingress.

CE18: Design Decisions on Trial: Lessons from Real Claims
Presenters: Leslie Parker, Senior Architect, Phil Ghosh, Managing Counsel

Presentation Description:
Architects face a wide range of professional liability claims—some predictable, others surprising. This session explores actual claims case studies to uncover the design decisions, documentation practices, and collaboration dynamics that led to disputes. Through interactive discussion and peer-led analysis, participants will examine what went wrong, what could have been done differently, and how to apply these insights to their own practice. The session will highlight how collaboration with consultants, clients, and insurers can mitigate risk and strengthen professional resilience.

Key Resources

• Technical Requirements Schedule – updated in April 2026 to include Insulated Metal Panel Systems
• Take the Architectural Risk Management Assessment Review (ARM/r) for a quick way to potentially identify gaps in your risk management systems. Check your ARM/r now!

• Best-in-class Professional Liability Insurance: Learn more about the refreshed Professional Liability Insurance Policy and supporting FAQs.

• Dispute-resolution clauses: Learn more about Mandatory Arbitration and understand how these contract clauses undermine your defense.
• Risks of Expedited Housing Design and Construction. This article from the 2024 OAA Conference was a hit with architects. We’re sharing it again as it offers relevant insights that are just as valid today. Authored by: Leslie Parker, Senior Architect and Iliana Arapis, VP Client Experience.

Additional Resources

To download any of the following resources, click on the ellipses embedded with the resource shown and select “Download PDF File”.

Your professional liability insurance premium is primarily affected by two main figures: (1) the architectural fees reported to Pro-Demnity, and (2) the rate we apply to those fees. Your premium is, at its most simple, the average of the fees you have reported to us over the past three years multiplied by our rate. The same base rate is applied to all practices and policyholders. This base premium is then adjusted to reflect the mix of work you have reported to us, the “per claim” limit you are purchasing, your deductible, jurisdictions outside of Canada, etc. to get your final premium payable.

Rate Change of 0% on 2026-2027 Renewals for Mandatory and Optional Limits

Since 2020 Pro-Demnity has advised of steady, predictable rate changes, typically between 1% and 5%. We continue to strongly encourage architectural practices to plan for rate changes at 5% in their annual forecasting and financial planning scenarios, as well as for project fee planning purposes.

Rate changes enable Pro-Demnity to:

• Keep up with the increased costs (expenses and damages) of protecting and defending Ontario architects. Our rates are mostly driven by claims costs, and these costs are affected by increasing repair, reparation, and defence costs. In addition, the looming threat of tariffs on the import of construction-related materials and finishes must also be considered.
• Continue to strengthen the organization’s fiscal capacity to meet future anticipated claims and risk projections. This is a top priority.

Given the company’s strong financial position in 2025, a 0% rate change will be applied to premiums from April 1, 2026 through to March 31, 2027, upon renewal.

This is possible due to:

• Incremental gains in financial strength driven by higher architectural fees and modest rate increases.
• Continued improvements in claims expense management.
• More favourable reinsurance arrangements resulting in cost savings.
• The release of excess claims reserves in recent years.
• An improved forward-looking selected loss ratio resulting from favourable claims performance.

Regarding economic uncertainties, it is important to recognize that we do not operate in isolation. Factors such as changes in tariffs, geopolitical conditions, and broader economic instability will continue to influence the industry and Pro-Demnity. While we are well positioned to manage these uncertainties, we are not immune to their impact.

Annually, the base rate is re-calibrated. Working with our finance and actuarial teams as well as our reinsurers, we work to keep our increases predictable and as affordable as possible. Although these rate changes will not affect you until your next policy renewal from April 1, 2026 through to March 31, 2027, we endeavour to communicate rate increases as early as possible to enable you to better anticipate the impact to your business and adjust accordingly.

Rate and Premium Together

Remember your premium is calculated by multiplying the three-year average of the fees you have reported by our rate … meaning that if your three-year average fees have increased, your premium will go up by more than 0 %.

In calculating total premium, we calculate premium in bands: the premium for the bottom layer of coverage is calculated using our base rates, the next layer pays a percentage of the base rate, the next layer a smaller percentage of the base rate, and so on. This reflects the ongoing reality that most claims still settle within lower limits of insurance, which allows us to reduce the cost of the higher bands of coverage. Among the consequences of this approach is the outcome that purchasing a $5 million limit is not five times the price of a $1 million limit, and $1 million is not four times the premium of a $250,000 limit.

This “banded” approach to premium calculation also allows us to adjust how our rate applies across various limits. Since our rate increase mostly reflects the growth in claims costs, and since those costs remain concentrated in lower claims limits, we do not plan to apply our 4% rate increase to higher coverage limits. This means that those practices that purchase higher limits will see a rate increase less than 3% on their overall premium. 

Planning for the Future

In alignment with our commitment to supporting your business success, we continue to strongly encourage policyholders – as a general business practice – to budget and plan for at least a 5% rate increase every year. We have been working diligently to ensure stable, steady rates for architectural practices so that unexpected annual fluctuations are minimized. In our 2026 Annual Update and in previous communications since 2021- worth repeating this year – Pro-Demnity has consistently shared that the costs it faces continue to climb. Several trends over the last 10-12 years have increased architects’ exposure over longer periods of time, and we anticipate these trends to persist, and we foresee the ongoing need for rate increases in the future.

We hope that clearly communicating our expectations for the future will enable you to budget, plan and forecast with greater confidence and reliability, minimal surprises, and provides you with a cushion when a lower rate increase is applied, as is the case this year. We are committed to controlling all the costs we can, but we do not want to mislead you about our future expectations.

Why Professional Liability Insurance Matters

As a reminder, your professional liability program serves two purposes:

• To protect you, our policyholder. As the architects’ professional, trusted ally, Pro-Demnity guarantees that we will protect and defend architects in accordance with their respective insurance policies. To do so, we need to ensure we maintain the fiscal strength and capacity to meet these requirements.
• As a wholly owned subsidiary of the OAA, we serve to re-assure the public that architectural firms have the financial resources, through their insurance policy, to fulfill their duty of care to clients and society when there are allegations of error, omission, or negligence.

By being fiscally responsible, diligent in our governance and helpful in our service to you, Pro-Demnity is upholding our promise to provide architectural practices with an alliance for protection.

Risk Education Resources

Extensive risk management resources are available to all architectural practices and employees. Knowledge of the risks associated with practice and how to mitigate, manage, transfer, avoid or accept those risks, will heighten your business acumen. We actively share our knowledge and expertise with you and encourage you to prioritize your ongoing education of these risks. Even if your firm has never had a claim to date, our experience suggests that no firm – no matter their size, location, length of time in business, reputation, or expertise – is immune from being named in a claim.

The risks you face in your architectural practice may translate into actual claims. Before they do, avail yourself of the risk articles, bulletins and thought leadership news items on our website at any time.

We also invite you to “check your ARMr”.  ARMr is the Architectural Risk Management Assessment Report which will help you to zero-in on identifying potential risks, and to strengthen your overall risk management. The report provides guidance on how to close risk gaps.

Finally, should you need to reach out to any one of our architectural risk experts to discuss a difficult or challenging situation regarding contracts, clients, constructors etc., book a meeting to Speak with an Expert.

Being your Ally

We take being your professional, trusted ally very seriously. No one understands the risks that architects face better than Pro-Demnity.

Pro-Demnity operates on behalf of architects, and only architects. Our unwavering commitment to Ontario’s 1,560+ architectural practices is to ensure that they, and your firm, will always be protected and defended in the event of allegations of error, omission, or negligence.

Should you have any questions about insurance rates or premiums, please contact our Underwriting team.

Interac e-Transfer is increasingly used to transfer funds, including clients submitting payment to architects. Interac’s weak link is the email systems used to send and receive notifications. Even with Autodeposit enabled, cyber criminals can redirect your funds before you receive them, sending your clients payment to the criminal’s account of choice.

In the article below we offer a cautionary tale and some information on how this is possible.

Early this year Pro-Demnity spoke with an architect seeking advice on the possible termination of a contract for an on-going project due to non-payment of the architect’s invoices. The client claimed to have paid the outstanding invoices using Interac e-Transfer, which had previously been used for this purpose without apparent problems. However, this time the payments did not reach the architect’s account.

The client had contacted its own bank and provided the architect with a screen shot confirming the funds had left the client’s account. However, it also showed that the payment had been directed to another e-mail address unrelated to the architect. Something didn’t add up, and the architect remained out of pocket. Hence the question about terminating the contract.

This unfortunate situation remains unresolved; however, Pro-Demnity’s finance team is sharing the following information as a “heads up” to architects who are using or considering use of Interac e-Transfers in their business dealings.

Finance Team Comments

Mis-directed e-Transfers is an increasingly common type of payment fraud that many businesses in Canada are experiencing. Statistics show that 1 in 5 businesses face payment fraud, and a significant 22% of these cases involve intercepted or misdirected e-Transfers.

Many Interac e-Transfer users understand that use of Autodeposit adds a layer of security for these types of transactions. However, assuming the client made the e-Transfer to the architect’s correct email address, and even though the architect had Autodeposit activated, the funds did not arrive. If this is correct, it suggests that the policyholder’s e-mail account may have already been compromised.

When criminals (aka “bad actors”) gain access to an inbox, they can view the incoming deposit notification, click the link before the intended recipient, and redirect the transfer to their own account. Once a fraudulent acceptance occurs, recovery becomes extremely difficult.

Banks may initiate a claw back, which is an attempt to recover the funds after they’ve been paid out. However, the receiving bank can only return the money if the funds are still in the account, and successful recovery is not guaranteed. It is also unclear whether the claw back request should originate from the client or the sender, so both may need to initiate contact with their respective banks.

To prevent such incidents, it is crucial that the policyholder secures their e-mail account or opens a new one if their account may be compromised. Enabling two-factor authentication is another essential step. Additional measures to prevent fraud include using a dedicated e-mail address exclusively for payment notifications and avoiding clicking various links from this e-mail account.

 It is important to remember that even with Autodeposit enabled, interception can still occur if a sender’s e-mail account is compromised and the instructions are altered before sending. Banks send the notification by e-mail, not the money. The actual money moves through the banking system, but the instructions needed to deposit or accept the transfer are sent to the e-mail inbox. If the sender’s e-mail is compromised, a fraudster can change instructions before sending. Thus, Autodeposit reduces risk but does not eliminate it entirely. While the bank moves the money, the e-mail controls who gets it as the e-mail inbox holds the keys to collect the funds.

In a follow-up conversation, the architect advised that efforts to recover the funds are continuing, and although they are reluctantly continuing to provide services on the project, at the architect’s insistence they are now using an Electronic Funds Transfer (ETF) process that does not utilize e-mail links.

Action Items for Architects:

1. Pro-Demnity’s Professional Liability Insurance coverage does not include coverage for damages or losses incurred by the architect policyholder arising from a cyber security incident as described in this article. Nor does Pro-Demnity have the ability or expertise to provide advice to architects about cybersecurity related to their financial affairs and business transactions. Cyber insurance products are available in the market, and we encourage every architectural practice to speak to their insurance advisor about arranging appropriate coverage.
2. Architects are strongly encouraged to contact their bank or financial institution to review what protections are provided by other types of Electronic Funds Transfer (ETF), and to contact their insurance broker to assess what insurance coverage may be available to cover such losses.

Contact the Risk Services team for assistance and guidance whenever you are facing a challenging situation with a project, clients, other consultants or need to understand if you are facing a claim.

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Our Contributor

Championing Ontario’s Architects

At Pro-Demnity, our cause has always been clear: to support Ontario’s architects to take the risks necessary to design a better world, to stand with you as a steadfast ally – championing your wise, efficient and effective management of risk.

Essentially, we:

• protect the work you’ve designed.
• defend your professional judgment when it matters most.
• advance your practice with clear coverage, practical risk services, and education.

In these pages, you’ll see the concrete steps we’ve taken in 2025 to reinforce the foundation architects rely on: fair and transparent premiums for best-in-class professional liability insurance coverage, expert defense and claims support, and ongoing improvements in your experience with us.

Protect. Defend. Advance. is our promise to continually elevate how we serve you. Across every touchpoint, every program, and every decision – we remain focused on strengthening your ability to practice with confidence in an increasingly complex environment.

We protect value, defend stability, and advance long-term performance.

At Pro-Demnity, fiscal responsibility is more than a metric – it’s endurance in stewardship that protects value through cycles. We pair that endurance with momentum: prudent decisions, disciplined risk management, and targeted investment that move architects’ practices forward – so stability today underwrites performance tomorrow. The result is transparent, defensible finances our policyholders can rely on when it counts and as they plan what’s next.

By being fiscally responsible, diligent in our governance, and helpful in our service to you, Pro-Demnity is upholding our promise to provide architectural practices with an alliance for protection.

Financial Strength:

• Is part of our commitment to be there for you throughout the lifetime of your practice and beyond, ensuring you have a trusted ally at your side in every claim situation at any time.
• Allows us to invest in new technology and better data collection and analysis, enabling us to expand and improve the advice and guidance available through our Risk Alliance offerings.
• Means you can confidently focus on running your business in times of uncertainty and increased risk, knowing that we will always protect and defend you as your trusted ally.

Our capital is the key measure of that strength: not only must we comply with insurance regulations of the Financial Services Regulatory Authority (FSRA) of Ontario, but we must also plan for economic and other trends that affect the company, both now and in the future.

Architects and the public expect that there be sufficient funds available to pay for errors and omissions of the profession.

As the architectural profession grows – as overall fees increase, as limits purchased increase, and as the dollar value of claims increase – our capital needs to grow to keep up. In 2025, architectural fees reported to Pro-Demnity grew by over 8%, and construction costs – which impact claims costs – continue to grow at nearly 4% per year. In response, Pro-Demnity continued to build its capital base.

See below for highlights of our financial performance in 2025:

Read the 2026 Annual Update:

Commitments in Action

We are both pleased to highlight our ongoing efforts to protect, defend, and advance the architectural profession in 2025. These three commitments guide every decision we make and every action we take. They form the core of our cause, purpose, ambition, and values and anchor our promise to champion architects’ wise, effective, and efficient management of risk.

Empowering Architects to Succeed

Architects navigate increasing complexity—technological, contractual, regulatory, and societal. Our role has never been more important: to stand beside your firm as a trusted ally. From enhancing loss-prevention resources such as our analysis of the Grenfell Tower Fire, to facilitating smoother and easier experiences with us, we continue to help architects practice with greater confidence and clarity. In 2025, we updated our premium calculation model to include an Experience Rating Factor (ERF), reflecting each individual practice’s 10-year loss ratio as compared to other Ontario practices. The ERF is a first step toward personalized insurance pricing based on a practice’s long-term risk profile. It also improves transparency and helps each practice understand their relative risk experience compared to their colleagues.

Less visible to policyholders, we have replaced and modernized our underwriting platform. This will help reduce costs in the long run, supports faster business processing and sets the foundation for future online service opportunities.

Pro-Demnity continued to protect and defend architects across diverse claims, including one which was heard at the Superior Court of Appeal in November 2025. We also made a meaningful contribution to the Ministry of the Attorney General and the Superior Court of Justice ongoing review of Ontario’s Rules of Civil Procedure.

This work is not possible without our exceptional employees. Their dedication, expertise, and unwavering support of you, our policyholders, allow us to meet challenges with agility and foresight. To every member of our team: thank you for being steadfast allies to architects in every corner of the profession.

Overseeing the entire company is our Board of Directors. Their ongoing leadership, strategic insight, and commitment to our mission provide the foundation for our continued strength and relevance. Thank you for your guidance and support.

A Milestone Ahead: 40th Anniversary in 2026/2027

As we embark on our 40th underwriting year, we recognize the significance of reaching this milestone. Four decades of service reflects not only the resilience of our organization but also the enduring trust placed in us by architects provincewide. We honour this history while setting our sights firmly on the opportunities ahead.

Strengthening Our Foundation for the Future

The landscape of design and construction will continue to evolve – and so will we. We remain focused on strengthening our core capabilities while advancing new tools, insights, and services that help architects better understand and navigate risk. Innovation, responsible stewardship, and responsiveness to emerging practice realities will guide our continued growth.

On behalf of the entire team, thank you for your continued trust and engagement. We are honoured to serve you.

Sincerely,

Debra Krakow, Chair, Board of Directors

Bruce H. Palmer, President and CEO

Situations may arise from time to time where an owner is unhappy with the performance of its contractor. This may come as no shock to many seasoned architects who have worked with underperforming or uncooperative contractors in the past.

Reasons for the dissatisfaction with the contractor may vary and may include underperformance, slow progress of the work and/or lack of adherence to the schedule, poor workmanship, excessive deficiencies or inadequate supervision.

In these situations, confidence in the contractor’s ability to complete the project competently, and on schedule, may be substantially eroded.

When this occurs, it is not uncommon for an owner to look to replace the contractor and perhaps call upon the surety under the performance bond. It is also not uncommon for an owner to instruct the architect to issue a Notice of Default as a precursor to terminating the contract.

Pro-Demnity has received a number of calls where the architect was instructed by the owner to issue the Notice of Default, and our guidance has remained consistent: Architects must not issue a Notice of Default. 

Undertaking a determination of Default amounts to providing a legal opinion as to whether the contractor is in breach of contract. Architects cannot, and may not, provide legal opinions, unless the architect also happens to be licensed to practice law, which presumably is rarely the case.

Owner’s responsibilities when a contractor is in default 

The determination should be made by the owner, who is a party to the construction contract, not the architect. Of course, this should be done in consultation with the owner’s legal counsel.

Architect’s responsibilities when a contractor is in default

The architect’s role is to provide the owner with sufficient factual information and supporting documentation regarding any possible breaches of contract and leave it to the owner and its legal counsel, to make any final determination as to whether the apparent breaches warrant a Notice of Default.

From a risk‑management and insurance perspective, the factual information that the architect prepares:

•  Avoids language that implies legal judgment (e.g., “default,” “breach,””).
• Sticks to objective observations, .
• Uses factual descriptors such as “the deficiencies remain unresolved as of [date].”
• Maintains consistent, contemporaneous documentation.
• Avoids taking on responsibilities that belong to the owner or construction manager.

What factors are considered in a possible default situation?

A contractor is in default when there is an unremedied fundamental breach of contract due to its neglect in performing the work and failure to comply with the contractual requirements. 

This is often due to failing to complete a project on time, not meeting specified quality standards, failing to adequately staff a job, failing to pay subcontractors, or otherwise neglecting their contractual obligations. Armed with the facts, the owner must provide opportunities to remedy the breaches in accordance with the terms and conditions of the contract before issuing a formal notice to the contractor.

Application Under the CCDC2 Document

Under the CCDC2 contract, an owner has the option to take over and perform the work, or terminate the contract. In addition, the prescribed default procedures must be followed in accordance with the provisions of the contract.

Construction contracts may reference the consultant’s duties. However, it is important to remember that the architect is not a party to a construction contract between the owner and the contractor.

The architect administers the construction contract and provides a factual assessment, not legal enforcement of the contract, like issuing a Notice of Default.  A well coordinated set of agreements often simplifies the process. You should ensure that your client-architect agreement reflects the consultant’s role in the construction contract. Using a standard form architectural agreement, will go a long way in aligning with the terms used in a standard form construction contract.

Final Thoughts for Architects and Owners in Default Situations

Declaring default under a construction contract may give rise to legal action and carries significant risk. An architect’s role is to support the owner by providing pertinent documents and other factual information to allow the owner and counsel to determine whether sufficient basis exists for a finding of default.

Defaulting a contractor improperly can lead to litigation so this responsibility should remain with the owner, under the advisement of a lawyer, and issuing the proper notices in accordance with the provisions of the construction contract.

Architects are encouraged to contact the Risk Services team in these (or similar situations) for assistance and guidance.

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Excerpt below of the Part 7, Default Notice, under a CCDC2-2020 Contract

PART 7 DEFAULT NOTICE

GC 7.1 OWNER’S RIGHT TO PERFORM THE WORK, TERMINATE THE CONTRACTOR’S RIGHT TO CONTINUE WITH THE WORK OR TERMINATE THE CONTRACT

7.1.1 If the Contractor is adjudged bankrupt, or makes a general assignment for the benefit of creditors because of the Contractor’s insolvency, or if a receiver is appointed because of the Contractor’s insolvency, the Owner may, without prejudice to any other right or remedy the Owner may have, terminate the Contractor’s right to continue with the Work, by giving the Contractor or receiver or trustee in bankruptcy Notice in Writing to that effect.

7.1.2 If the Contractor neglects to perform the Work properly or otherwise fails to comply with the requirements of the Contract to a substantial degree and if the Consultant has given a written statement to the Owner and Contractor which provides the detail of such neglect to perform the Work properly or such failure to comply with the requirements of the Contract to a substantial degree, the Owner may, without prejudice to any other right or remedy the Owner may have, give the Contractor Notice in Writing, containing particulars of the default including references to applicable provisions of the Contract, that the Contractor is in default of the Contractor’s contractual obligations and instruct the Contractor to correct the default in the 5 Working Days immediately following the receipt of such Notice in Writing.

7.1.3 If the default cannot be corrected in the 5 Working Days specified or in such other time period as may be subsequently agreed in writing by the parties, the Contractor shall be in compliance with the Owner’s instructions if the Contractor:
.1 commences the correction of the default within the specified time,
.2 provides the Owner with an acceptable schedule for such correction, and
.3 corrects the default in accordance with the Contract terms and with such schedule.

7.1.4 If the Contractor fails to correct the default in the time specified or in such other time period as may be subsequently agreed in writing by the parties, without prejudice to any other right or remedy the Owner may have, the Owner may by giving Notice in Writing:

.1 correct such default and deduct the cost thereof from any payment then or thereafter due the Contractor for the Work provided the Consultant has certified such cost to the Owner and the Contractor, or

.2 terminate the Contractor’s right to continue with the Work in whole or in part or terminate the Contract.

7.1.5 If the Owner terminates the Contractor’s right to continue with the Work as provided in paragraphs 7.1.1 and 7.1.4, the Owner shall be entitled to:

.1 take possession of the Work and Products at the Place of the Work; subject to the rights of third parties, utilize the Construction Equipment at the Place of the Work; finish the Work by whatever method the Owner may consider expedient, but without undue delay or expense,

.2 withhold further payment to the Contractor until a final certificate for payment is issued,

.3 charge the Contractor the amount by which the full cost of finishing the Work as certified by the Consultant, including compensation to the Consultant for the Consultant’s additional services and a reasonable allowance as determined by the Consultant to cover the cost of corrections to work performed by the Contractor that may be required under GC 12.3 – WARRANTY, exceeds the unpaid balance of the Contract Price; however, if such cost of finishing the Work is less than the unpaid balance of the Contract Price, the Owner shall pay the Contractor the difference, and

.4 on expiry of the warranty period, charge the Contractor the amount by which the cost of corrections to the Contractor’s work under GC 12.3 – WARRANTY exceeds the allowance provided for such corrections, or if the cost of such corrections is less than the allowance, pay the Contractor the difference.

7.1.6 The Contractor’s obligation under the Contract as to quality, correction and warranty of the work performed by the Contractor up to the time of termination shall continue in force after such termination of the Contract.

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Our Contributor

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.