Professional liability insurance is also known as “errors and omissions” or “malpractice” insurance. This type of insurance is purchased by professionals to address business liability risks that are not covered by their commercial general liability policies. The insurance protects engineering firms, their employees and clients from serious financial disruption. In practical terms, the insurance also provides access to projects and clients that may otherwise not be available.
There are three (3) main models in existence in Canada:
- insurance is mandated (Quebec and Manitoba follow this approach)
- disclosure is mandated (Ontario follows this approach)
- disclosure is suggested (this is done in most other jurisdictions)
In the past, Engineers Nova Scotia Council formed a Task Group to review our policy regarding whether or not such insurance should be mandatory in Nova Scotia. It was the view of the Task Group that professional liability insurance is a business issue as well as a regulatory issue. From a business perspective, member firms are wise to insure against certain events. However, from a regulatory perspective, the question of professional liability insurance has not been a major issue to the public. As well, the introduction of mandatory insurance would create a situation where insurance companies, rather than the engineering regulatory association, would be in a position to determine who could practice engineering.
Based on a recommendation from the Task Group, Council approved the following guideline:
- That members, and member firms, should either carry sufficient professional liability insurance or disclose to the client or potential client the absence of such.