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Insurance – Beyond Professional Liability Coverage

In most Canadian regulated professions where services are offered to clients, professional liability insurance is a staple. The CPATA Act includes a legislative requirement for licensees to hold professional liability insurance, which CPATA enforces. Insurance is a primary way in which CPATA can protect the public interest, as it protects clients in situations where errors and omissions on the part of the agent result in financial loss for clients. It also offers a benefit to agents and their colleagues by ensuring that resources are available to defend insured agents and redress damages.

Most of us rarely give a second thought to whether we should have home and auto insurance coverage, as well as health and life insurance. But when it comes to our businesses and practices, we do not automatically think about ways to manage what are very real risks.

In addition to professional liability insurance, professionals and business owners should consider other forms of insurance coverage to protect their own and their clients’ interests. This article highlights some considerations for CPATA licensees when assessing what additional insurance coverage might be prudent.

 

Who needs to have professional liability insurance

 

  • Class 1 licensees who provide services to the public
  • Class 2 licensees who provide services to the public (must have insurance by December 31, 2023)
  • Class 3 licensees (must be covered by the insurance policy of their supervisor, their employer or their own policy)

Licensees who do not provide services to the public (for example in-house pracitioners) are exempt from professional liability insurance requirements, regardless of which licence class they hold.

 

Policy Requirements

 

Professional liability insurance must meet the following requirements:

    • It must be issued by an insurance company licensed in Canada;
    • It must cover claims made in and outside Canada (in recognition of the international scope of practice of most IP agents);
    • It must indemnify the licensee for any civil liability that arises from the licensee acting as a patent or trademark agent; and
    • It must have coverage limits of a minimum of $1 million per claim and $2 million aggregate per year.

 

Other insurance options and considerations

 

It is important that as an IP professional, you understand and evaluate professional and personal risks relevant to your practice, so that you can decide what additional insurance coverage may be prudent. The key to this evaluation is identifying your foreseeable and actual risks, including:

  • Business interruptions from natural disasters, a pandemic, etc.
  • Cyber-attacks and data theft
  • Personal illness or death
  • Property damage
  • Crime

Having a range of insurance protection is an essential form of risk management for you and your business, helps protect you and your clients, and can give you a competitive advantage. Most forms of coverage also come with a range of services and support, including risk management tools and claims handling, which offer you peace of mind. It is important to compare the insurance products available, do your own cost-benefit analysis and get advice about what products would best suit your particular area and type of practice.

Another consideration when it comes to insurance is your ethical duties under the CPATA Code of Professional Conduct for Patent Agents and Trademark Agents. Part 2 of the Code sets out the duties licensees owe to clients to be competent, and this extends to ensuring that all of your employees are also competent. This can create challenges, and mistakes can be made by others for which an agent may be held responsible. Having coverage for such errors and omissions, as well as employment-related litigation, can be extremely helpful.

Part 3 of the Code addresses licensees’ duties of confidentiality and privacy. Accidental violation of these duties can lead to breaches of the Code as well as privacy legislation. There are many recent examples of massive data breaches that illustrate both how easy it is for this to happen and how costly these situations are to repair.

 

Types of insurance

 

There are many different types of insurance to consider in the current professional and business environment. What type(s) you need and the amount of coverage will depend on your areas of practice and foreseeable risks. Consider whether you would benefit from the following:

 

Business Owner Policies

    • Commercial general liability
    • Property
    • Business interruption

Professional Liability Policies

    • Directors and Officers Liability
    • Executor and Trustee
    • Excess Errors and Omissions
    • Run-off (for claims filed after you leave practice)

Other

    • Cybercrime and data theft/loss
    • Crime
    • Employment litigation
    • Critical illness/disability/key person insurance
    • Personal: health, life, LTD, home, auto

Insurance can be costly, so do your research, ask the experts, talk to your fellow agents, and ensure your business plan includes appropriate insurance to help you manage risk.

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