Professional Liability Insurance

$1 million where one member is engaged or employed in the practice of public accounting;
$1.5 million where two or three members are engaged or employed in the practice of public accounting in the same sole proprietorship, partnership, or professional corporation; or
$2 million where four or more members are engaged or employed in the practice of public accounting in the same sole proprietorship, partnership, or professional corporation.

The minimum limits apply to all members in public practice, including part-time practitioners and those with small limited practices. This ensures that all CAs in public practice carry the required minimum coverage, in order to protect the public interest.

Many members in small, medium and large firms, who already carry coverage at or above the proposed new levels, will be unaffected by the changes. For members and firms who will be affected by the changes, it is anticipated that, based on current data from the Association of Insured Chartered Accountants (AICA, which provides insurance coverage for about 85 per cent of small- and medium-sized firms), the base premium costs for members who carry minimum levels of PLI coverage would increase by no more than $36 per month.

In accordance with the Standards adopted by the Public Accountants Council for the Province of Ontario, the Institute’s Council has also adopted, effective immediately, a maximum deductible requirement for professional liability insurance policies maintained by members, firms and professional corporations who practise public accounting. The professional liability insurance policy must prescribe a maximum allowable deductible that must not exceed 50 per cent of the minimum coverage amount. The amount of the deductible also must be reasonable in relation to the total revenues of the member’s, firm’s or professional corporation’s practice of public accounting. In addition, the member, firm or professional corporation must set aside assets at least equal in value to the amount of the deductible.

Availability

Members who do not currently have coverage are urged either to contact their own insurance brokers, or one of the following:

Members are reminded to read the fine print in your insurance contract to ensure that your policy provides the coverage needed to meet the Institute’s mandatory professional liability insurance requirements (Regulation 4-4 and Bylaw 4.12). For more information on this see the CheckMark article entitled Read the Fine Print in your Professional Liability Insurance Policy.

Cost

The minimum annual premium for the prescribed coverage through AICA for a part-time practitioner as of January 2011, is approximately $1050. This is a base rate, dependent upon the following conditions:

The maximum limit of liability under this policy for a part-time practitioner is $1,000,000 per claim, with a $1,000,000 aggregate limit. No deductible credits are offered.

The minimum premium for the prescribed coverage through AICA for a full-time sole practitioner as of January 2011, is approximately $1,450. This base rate may be increased if any of the following conditions exist:

The maximum limit of liability where only the prescribed coverage is obtained through AICA is $1,000,000 per claim, with a $1,000,000 aggregate limit. There may be a deductible.

These are approximate premiums only. Please contact your carrier for more detailed premium and coverage information.

Discovery Policy

Given that grounds for a claim may be discovered after a member ceases public practice, a six-year discovery period has been mandated, to ensure that both the public and the member are adequately protected. In general, the premium for a discovery policy declines over the six years to 30% of the premium paid, or a minimum of $150, during the member's last year in practice. Should a member pass away, the estate should maintain the coverage for the six-year discovery period, in the event that a claim should arise, for which the estate would be liable. Please ensure that your current policy provides coverage for the entire six-year period as some insurance companies do not provide coverage for this period in all circumstances.

The AICA Services Inc. has a special discovery policy for sole practitioners at no cost, granted the practitioner meets the AICA's requirements of eligibility. Please contact the AICA for further information.

Professional Liability Insurance

General Information

Prescribed Levels of Insurance

Availability

Cost

Discovery Policy

	The Institute of Chartered Accountants of Ontario

Professional Liability Insurance General Information For newly registered firms and professional corporations, professional liability insurance must be obtained prior to the commencement of the practice of public accounting and proof of coverage must be provided within 2 months of the commencement date and annually thereafter. A notice to update current insurance information with the Institute will be sent annually and will contain a declaration of compliance with the mandatory insurance requirement. Members who are practicing public accounting and do not have insurance will be subject to suspension and ultimately revokation of membership if they continue to practice without the prescribed insurance coverage. Once you cease practising public accounting you are required to maintain discovery insurance for 6 years from the date of cessation. Notification of practice closure is required in writing. If the practice is a professional corporation there are additional requirements. Prescribed Levels of Insurance Minimum Professional Liability Insurance Requirements The minimum PLI limits as of January 1, 2008 are: $1 million where one member is engaged or employed in the practice of public accounting; $1.5 million where two or three members are engaged or employed in the practice of public accounting in the same sole proprietorship, partnership, or professional corporation; or $2 million where four or more members are engaged or employed in the practice of public accounting in the same sole proprietorship, partnership, or professional corporation. The minimum limits apply to all members in public practice, including part-time practitioners and those with small limited practices. This ensures that all CAs in public practice carry the required minimum coverage, in order to protect the public interest. Many members in small, medium and large firms, who already carry coverage at or above the proposed new levels, will be unaffected by the changes. For members and firms who will be affected by the changes, it is anticipated that, based on current data from the Association of Insured Chartered Accountants (AICA, which provides insurance coverage for about 85 per cent of small- and medium-sized firms), the base premium costs for members who carry minimum levels of PLI coverage would increase by no more than $36 per month. Maximum allowable deductible also introduced In accordance with the Standards adopted by the Public Accountants Council for the Province of Ontario, the Institute’s Council has also adopted, effective immediately, a maximum deductible requirement for professional liability insurance policies maintained by members, firms and professional corporations who practise public accounting. The professional liability insurance policy must prescribe a maximum allowable deductible that must not exceed 50 per cent of the minimum coverage amount. The amount of the deductible also must be reasonable in relation to the total revenues of the member’s, firm’s or professional corporation’s practice of public accounting. In addition, the member, firm or professional corporation must set aside assets at least equal in value to the amount of the deductible. Availability Members who do not currently have coverage are urged either to contact their own insurance brokers, or one of the following: The Association of Insured Chartered Accountants Services Inc. (AICA) , Rebecca Herring, Program Representative 416-204-3398 or 1-800-267-4734 Sinclair-Cockburn Financial Group, Darren Rodrigues, ext 361 or contact Penny Tasevski ext 307 Phone 416-494-7700 Toll Free 1-800-328-7887. View On-line Application. Canada Brokerlink (Ontario) Inc., Frances Donato 416-497-6907 or contact Michelle Robertson AON Reed Stenhouse Inc., Stella Lee 416-868-5739 LMS PROLINK Ltd., Christopher Fay, 416-644-7744 Members are reminded to read the fine print in your insurance contract to ensure that your policy provides the coverage needed to meet the Institute’s mandatory professional liability insurance requirements (Regulation 4-4 and Bylaw 4.12). For more information on this see the CheckMark article entitled Read the Fine Print in your Professional Liability Insurance Policy. Cost The minimum annual premium for the prescribed coverage through AICA for a part-time practitioner as of January 2011, is approximately $1050. This is a base rate, dependent upon the following conditions: annual gross billings must not exceed $30,000; there must be no more than one CA and one part-time staff; the part-time practice is in addition to full-time employment, or the CA is retired and provides services from his/her home. The maximum limit of liability under this policy for a part-time practitioner is $1,000,000 per claim, with a $1,000,000 aggregate limit. No deductible credits are offered. The minimum premium for the prescribed coverage through AICA for a full-time sole practitioner as of January 2011, is approximately $1,450. This base rate may be increased if any of the following conditions exist: previous claims; gross billings over $425,000; over 60% of the services performed relate to management consulting; the sole practitioner employs more than one staff person; civil penalty coverage is added. Additional features offered through AICA's program are: Directors & Officers coverage of $1,000,000, at no additional cost for qualifying boards; A Deductible reduction if an engagement letter or a claim is successfully settled using an alternative method to going to court; Coverage for traditional and non traditional CA services including coverage for public company related services; Defence costs in addition to the policy limit; Innocent partner coverage; True worldwide coverage can be added to your policy to respond to a lawsuit presented in a country outside North America where the services are rendered; The maximum limit of liability where only the prescribed coverage is obtained through AICA is $1,000,000 per claim, with a $1,000,000 aggregate limit. There may be a deductible. These are approximate premiums only. Please contact your carrier for more detailed premium and coverage information. Discovery Policy Given that grounds for a claim may be discovered after a member ceases public practice, a six-year discovery period has been mandated, to ensure that both the public and the member are adequately protected. In general, the premium for a discovery policy declines over the six years to 30% of the premium paid, or a minimum of $150, during the member's last year in practice. Should a member pass away, the estate should maintain the coverage for the six-year discovery period, in the event that a claim should arise, for which the estate would be liable. Please ensure that your current policy provides coverage for the entire six-year period as some insurance companies do not provide coverage for this period in all circumstances. The AICA Services Inc. has a special discovery policy for sole practitioners at no cost, granted the practitioner meets the AICA's requirements of eligibility. Please contact the AICA for further information.
Printed on Wed, May 16, 2012 - 3:8:54 EDT http://www.icao.on.ca/CAfirms/Registrations/LiabilityInsurance/1008page1106.aspx © 2012 Institute of Chartered Accountants of Ontario