What is it?
Annual practice insurance is your Professional Liability insurance. It’s what protects your architectural firm against possible claims made against you for projects undertaken, that can even creep up from past years. It’s not just insurance, it is a” must-have” ally. In fact, it is so critical, it has been mandated by the OAA for all architects practicing in Ontario with a Certificate of Practice. It is also known as E&O (Errors and Omissions) or even Malpractice insurance.
On a side note: This insurance is ‘Claims made’, meaning that the coverage applies to the year the claim is made not necessarily the year the alleged error, omission or negligent act occurred.
Why do you need it?
For starters, its’ essential.
Professional Liability Insurance is essential for architectural practices. An architectural firm is always affiliated with others such as clients, engineers, building specialists, general contractors or sub-contractors in any given project and if deficiencies are uncovered, one or more parties can easily file a claim against all the other parties. Business is business but then there’s claims business. Additionally, the monetary amounts for claims can be substantial and could jeopardize the viability of your firm if you were not covered. Can you imagine all that work, lost to a claim?
If you do receive a claim, rest-assured that we will always be on your side and as your professional liability insurer, will protect and defend your interests. As your trusted ally and an authority on risk, Pro-Demity has over 34 years of experience and expertise in your corner to contest the claim. Pro-Demnity is proud to say that no firm has ever gone out of business as result of a claim covered by their professional liability insurance. (not to boast).
What does it cover?
Essentially, your annual practice insurance covers the three key facets to any claim – Damages, defence and supplementary payments. While the vast majority of claims are insurable, like any insurance policy, there are certain limitations or exclusions that should be reviewed so that you are in the know, what’s covered and protected and what’s not.
- Damages: These are the result of a claim that may be handed down by a court, an arbitrator or an amount agreed to through negotiation. Your policy gives you coverage, so these damages are paid, minus the deductible up to the limit of your coverage. Your coverage is for damages that result from an error, omission or negligent act that you may have committed, whether it is proven or not. We are your ally even if mistakes happen.
- Defence: The cost and complexity of mounting a defence can be considerable, but we are by your side the whole time. Because of your coverage, Pro-Demnity and designated legal counsel will defend you against any claim in any civil suit or arbitration even if the claim is without merit, fraudulent or false.
- Supplementary Payments: When the damages exceed the amount of your coverage, Pro-Demnity still has your back and will still pay a portion of the damages even though it has exceeded the claim limit. While it doesn’t cover 100% of the cost, it will significantly mitigate your liability even in a ‘worst case’ outcome to a settlement.
How does it work?
Let’s break it down. The basic coverage you have with Pro-Demnity and the deductible are based on your firm’s gross revenues, so depending on the size of your firm you will fall into one of three tiers. The premium you are charged is based on the claim limits you qualify for and our valuation (supported by actuarial data and historical precedence) of how much it could cost to defend the claim and what would potentially have to be paid out:
Total Gross Fees:
Total Gross Fees:
Total Gross Fees:
(1) Claim Limit $250,000
(2) Claim Limits $500,000 and above
(Policy wording see section “Increased Limits of Liability Program” below)
This supplements the mandatory indemnification requirement through the issuance of single project insurance when required by the holder or client. While it is in force, the single project insurance replaces the annual practice insurance for the particular project.
Limits of Liability:
Claim Limit: $250,000
Aggregate Limit: $500,000
We are here to empower you by educating you. Be sure to understand these definitions:
- Total Gross Fees: Revenue declared in your financial statements + fees for services by contractors + reimbursable expenses
- Claim Limit: Refers to the maximum amount of coverage for any one claim
- Project Limit: Refers to the maximum amount of coverage for any one project assuming there were multiple claims
- Aggregate Limit: The total coverage that could be paid per year if you had multiple claims for different projects
How to purchase annual insurance?
So your firm has applied for a certificate for practice – now what? Simply call Pro-Demnity to get the ball rolling on purchasing annual insurance or visit us online and book a time to chat with an allied expert.
Ready to renew?
- We do it for you.
Our auto-renewal is self-triggered, meaning 60 days before insurance expires, Pro-Demnity will reach out to the proper contact to ensure renewal forms are complete. We are on it, so you can focus on design.
- New year, new risks.
Time to revisit your firm’s risk practice management strategies, and consider increased limits (which helps architects pursue high value work) and/or spike up insurance as part of your risk management tool kit. We have risk courses that help you reap the rewards of being risk ready and protected.
- You’ve grown, great! Now make sure you protect the new success.
You are engaging in (i.e. commercial, residential, healthcare, more green projects) Let us know so you can keep growing while we do the protecting and defending.
- The Annual Renewal form is just a click away. Simply download here.
Annual Insurance (targeted to new Certificate of Practice holders)
Renewal of Annual Practice Insurance