Product Overview 2008
Errors & Omissions Policy for members of
CanMAPP®
Link to application follows
This insurance policy was designed for members that work in a capacity as an accountant. It is not designed for individuals that provide the following:
1. Financial Planning or Investment Advice
2. Computer Software Development, Maintenance or Consultation. Installation & maintenance of accounting software is covered
3. Beneficiary, Trust or Estate Management, Preparation of tax returns is covered
4. Mortgage Brokering Services
5. Property Management
6. Trustee of Bankruptcy
7. Title abstraction
The policy excludes coverage for the above activities. However, if the insurance activities are a minor part of your income, the company, upon review and for an additional premium may remove the exclusions.
Claims made Basis Policy:
This policy is written on a claim made basis. Generally all errors & omissions policies are written on this form. This policy will provide a retro date of inception for each certificate issued this year. This means that if someone that you performed work for last year brought a claim against you, this policy ( subject to the exclusions listed above and any others included in the standard policy wordings) would not respond to either defend the action or settle the claim. However, Prior Acts coverage may be available for additional pricing. If you currently have errors & omissions insurance you may wish to inquire if you can purchase, what is called tail coverage for this exposure.
Eligibility:
Membership in good standing is required. This group insurance product has been established for members of CanMAPP®, who are also certified / chartered members of a Statutory Regulatory Body (SRB) in Canada. Minimum participation in a province is also needed.
Contact Broker:
For detailed information, please contact Bob Burns at The Unity Group,
3063 Walker Rd., Windsor, ON N8W 3R4
Fax 519 966-6177
Toll Free 800-563-9441 ex 242
an application form link follows this posting.
Disclaimer: This web site posting is for information purposes only, some details may be different at the time of purchase. Please refer to the written policy and broker for complete details and disclosures.
Retro Date Coverage Vs Tail Coverage
It is very important to understand that on a claims made basis policy when you change companies it is possible to have a gap in insurance for previous acts. However, the alternative is to never change companies and possibly be exposed to ever increasing premiums. There are basically two ways this gap can be reduced or avoided. These are through the use of tail coverage or the retro date on the new policy.
Retro Date
This is the first date that the policy will respond to for a claim. It is usually the commencement date of the policy with the insurance company. However, it may be an earlier date up to and including the date of the first policy the named insured ever purchased. It can be very difficult to obtain a retro date prior to the policy inception from a new insurance company, because the insurance company is not collecting premium to cover all these prior years. The new policy, from the Lombard Insurance Company does have a 1 year retro date. Effectively, this means they are provided 2 years worth of coverage and only charging one year worth of premium. They have also agreed to provide two other options of an earlier date for an additional fee. Pricing information is included in the application. If you do not purchase this earlier date of coverage and 5 years from now a claim is presented that was related to services performed prior to January 1, 2005 there will be no coverage provided to you. The other way to protect yourself from this gap is “tail coverage”.
Tail Coverage
Tail coverage is purchased from the insurance company usually when you cease doing business and is purchased to protect you from claims that are presented in future years for work you had done prior to ceasing business. This coverage could also be used to reduce gaps when you are changing insurance companies. However, sometimes the limitations on the policy wordings, or because the carrier does not choose to offer it to an insured who is changing insurance companies the coverage may not be available.
Retro Date Coverage Vs Tail Coverage
If we make the assumption that the same retro date coverage was available as was provided by a tail coverage offer the retro date coverage would be a much better purchase. Tail coverage still only provides a limited period for claims to be presented as a retro date coverage will continue to go forward as long as you continue the insurance. This also assumes that identical wordings (coverage) are provided by both policies.
Who has the biggest exposure?
Although, no one has a crystal ball, there are certain business activities that potentially could have a very long discovery period and those professionals involved in those activities likely have the biggest exposure. One example for your profession would be investment activities/ financial planning. The reason for this is the strategies and outcomes of these activities, quite often cover long periods of time before the realization of the activity occurs. When we compare this activity, to the preparation of a tax return, that generally any error becomes evident within a few years, we see a much bigger exposure. Anyone involved in the financial planning or investment advice should not change to this new policy. We as your brokers cannot make this decision for you. You must review your business activities and decide if you want to take this risk.
How else can I protect myself?
Review your activities and correspondence for the last few years if you have any indication that a pending loss could occur and have not reported it to your current insurer you should report it now. You will need to talk to your current broker on the procedures for this and if in your particular incident it should be reported. A letter even threatening legal action may be enough to put the company on notice of a potential claim. Once the company has been notified of a potential claim for a covered loss the policy will respond.
Questions & Concerns
I urge you that if you have any questions or concerns you call me or your current broker to disucss before making the decision
Bob Burns – HUB INTERNATIONAL – 1-800-563-9441 x242
6:00AM – 2:00PM MST
7:30AM – 4:00PM EST
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