Personal Corporation Errors & Omissions Coverage
Your agent’s E&O insurance was intended to protect you from any legal action that might be brought against you. Under Common Law and the Civil Code (Quebec), professionals are held to a higher standard by virtue of their accreditation and training.
If you have set up a corporation under which you conduct your business, this entity could also be named in any action against you. If you have licensed agents other than yourself working in your entity (including licensed administrative assistants), your entity’s exposure to claims risk is higher. More clients also means greater exposure.
In certain circumstances, the ABS agent’s E&O coverage can be extended to cover your personal corporation.
Protection for “personal corporations” is included under the ABS program
When you purchase your individual coverage (A, B, C) with ABS, coverage for “Personal Corporation” is automatically included. This means that, if eligible, the agent’s personal corporation is considered to be an additional insured under the ABS agent’s E&O coverage.
However, not all corporations are the same; some, depending on their ownership structure, may not qualify for personal corporation coverage, and would therefore require separate corporate coverage.
Please refer to the master policy wording for actual policy definitions and for business activities covered.
If your corporation isn’t eligible to be added as an additional insured, your entity has limited protection under your agent’s E&O coverage. In fact, the coverage for your firm is limited to “vicarious liability,” provided you’ve declared your firm on your agent’s E&O insurance application.
What is “vicarious liability”?
In Common Law and under the Civil Code, the doctrine of vicarious liability establishes that in an employer-employee or agency-agent relationship, the employer or agency may be held liable for the conduct of its employees, without proving actual negligence.
However, should a claim be brought against your entity alleging negligence (“direct” liability), such as allegations of negligent hiring, negligent supervision or training, your agent’s E&O policy won’t respond to defend your entity because this does not constitute vicarious liability. Neither will the policies carried by any of your employed or contracted agents respond for direct liability allegations. Also, where a licensed agent has left the entity, or where the agent has failed to maintain individual E&O coverage, and a suit is brought against the entity alleging negligence on the part of the former employee, your entity could be called upon by the courts to respond. Under these circumstances and many other situations, your agent’s E&O policy won’t respond to protect your entity. Any legal expenses or court awards would be borne entirely by your entity.
If your corporation is ineligible to be covered as an Additional Insured, we recommend consideration of a separate corporate E&O policy. For more information, please consult our Corporate E&O Application Form or contact us at email@example.com.