Minimum Professional Liability Insurance Requirements
The minimum amount of professional liability insurance required to be maintained is set out in Regulation 4-4.
The minimum limits apply to all sole proprietors, firms and members engaged in the practice of public accounting or providing accounting services to the public in Ontario who are partners in any organizations other than sole proprietorships or firms, including those who practice on a part-time or contractual basis.
Maximum Allowable Deductible
Regulation 4-4 requires that any deductible amount must be reasonable in relation to the total revenues of the sole proprietor or Firm and shall not exceed fifty per cent of the required minimum amount of insurance to be maintained. Each sole proprietor or firm must ensure that assets (cash or cash equivalents) are set aside at least equal in value to the amount of the deductible that is specified in the professional liability insurance policy.
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 the insurance contract to ensure that the policy provides the coverage needed to meet the mandatory professional liability insurance requirements of Regulation 4-4.
Please contact your insurance provider for detailed premium and coverage information. Also check limits per claim as well as the aggregate limit.
Keep in mind that each provider may offer different features. For instance, check whether:
- Directors & Officers coverage is provided, at no additional cost for qualifying boards;
There is a deductible reduction if a claim is successfully settled using an alternative method than to going to court;
- Traditional and non-traditional CPA services are covered, and whether coverage is provided for public company related services;
- Defence costs are covered in addition to the policy limit;
- There is 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.
- There are separate charges for a discovery policy in your circumstances when you cease to practice public accounting or providing accounting services to the public.
Regulation 4-4 requires that professional liability insurance in an unreduced amount must continue to be maintained for a period of at least six years after the member, in general terms, ceases to be involved in the practice of public accounting or providing accounting services to the public or the practice is dissolved. More specific details on the circumstances are provided in Regulation 4-4. This type of policy is generally referred to as a "discovery policy".
Should a member pass away, the estate should maintain coverage for the six-year discovery period.
The CPA Professional Liability Plan Inc. has a special discovery policy for sole practitioners (under certain circumstances) at no cost, granted the practitioner meets the AICA's requirements of eligibility. Please contact the CPA Professional Liability Plan Inc. for further information.
Policy for Members Providing Assurance Services Without Reward for NPOs
Members who provide public accounting services without reward, under certain conditions, are exempted from the requirement to be licensed. They must still however, have professional liability insurance coverage.
If you are a member providing assurance services without reward for small charitable or not-for-profit organizations, CPA Ontario has approved a policy to provide insurance coverage at no cost providing that you register with CPA Ontario and meet certain terms and conditions.
One of the conditions is that each organization for which assurance services are provided without reward have annual gross revenue from all sources of $100,000 or less. (See Public Accounting Licence for more information on the exemption and how to apply for the policy arranged by CPA Ontario.)