PROFESSIONAL LIABILITY INSURANCE

Dependent on the contract employee's scope of services and supervisory responsibilities, the nature of errors/omission liability coverage must be critically reviewed as to the impact on the employee, the employer and other parties affected by the services to be performed.

Employees may reasonably expect the employer's corporation has appropriate Professional Liability or Errors/ Omission insurance coverage for their areas of operation. However, this situation can vary considerably in various private and public organizations. Contract employees and independent contractors should determine potential exposure to liability and analyze requirements accordingly.

Where professional liability insurance is deemed to be required, on either of a continuing or project-defined basis, the contract employee should explore the possibility of being added under the liability insurance of the client, if available. This method may be more accessible to a contract employee than to an independent contractor.

When required to independently obtain professional liability insurance, the contract employee should endeavour, in the contract with the client, to normally limit liability to one of the following:

· value of fee
· % of construction cost of work contract
· amount of coverage in effect
· direct damage.

When commercial liability insurance coverage is not available to the individual, the professional should include clauses in the contract agreement that clearly and fairly reflect the level of contractual liability being assumed by each party.

A contract employee should not assume unlimited liability for any and all claims which may arise out of the service supplied, and should make sure that contract terms are explicit in outlining liability limitations.

A well-written scope of services contract is desirable. Oral or purchase order style contracts should only be considered with caution. The contract should also define coverage requirements of the contract employee and/or employers following termination of contract but prior to professional liability limitations. Assistance in contract form and language is available from professional liability insurers and organizations such as Association of Consulting Engineers of Canada.