Exploring E&O Insurance And Why Engineers Need It

Engineering is a profession that has a very broad field, with innumerable disciplines and sub-disciplines associated with it. The field of engineering applies science to design and development to ensure a practical end. There are many types of engineers, which are way to many to mention them all. When overviewing the engineering profession, there are many job duties attached to it, making the engineer’s job extremely difficult. There will always be risk of failure and errors, which is why engineers need to be covered with errors and omissions insurance in Ontario.

Resolving System Malfunctions

Engineers are responsible for overseeing the installation of different types of systems. This could be a commercial heating and air conditioning system or a steam system. Many times the engineer will oversee the process, without hands on experience. This basically puts the engineer in a compromising position, because they leave the manual labor in the hands of a contractor. Not only does this make the engineer’s job even more risky, but also it puts them at a disadvantage, especially when working with a contractor they are unfamiliar with.

If the client is left with a financial loss, linked to an error or negligence, because of something the contractor or engineer did incorrectly, the engineer will be responsible for reimbursing these losses. This is where errors and omissions insurance coverage comes into play. The policy will cover defense costs, settlements and judgments, so the engineer does not have pay out of pocket and risk losing their business.

Working Multiple Projects

Most engineers find themselves working on multiple projects simultaneously. It can be extremely difficult to oversee multiple projects, without experiencing a mishap. The engineer’s job duties are very extensive, requiring intricate details of designs and applications. One little error could potentially cause a huge catastrophe, which would be devastating for both the engineer and their client. The only way to protect your self is with E&O insurance.

engineer liability insurance

Understanding The Definition Of Error And Omission Insurance

As an engineer, you probably already know that business liability insurance covers any financial losses due to property damage, bodily injury, or advertising injury, but what type of insurance covers the customer in the event that your work is not performed as guaranteed? This is what error and omission insurance does and it is also sometimes referred to as professional liability insurance.

Error and omission polices can cover anything from defense, settlement, and judgment costs. Even if you are forced to appear before a court of law and are found not guilty, you will likely incur thousands of dollars in court costs and lawyer fees. For smaller companies and engineering firms, this can completely bankrupt them. Simply put, error and omission insurance policies cover you in the event that you do something to cause your client to suffer financial losses.

When You Need To Purchase Error And Omission Insurance

When it comes to buying any type of insurance policy, the best time to purchase is before a risk is taken. As an engineer your designs are expected to stand up the test of time, but you know all too well that one little miscalculation can throw the whole project off. For instance, if you are going to be designing a heating and air duct system for a large corporation in Ontario, it would be best to acquire error and omission insurance, before the work is started. The reason for this is because if you are not covered at the current time, but purchase a policy after a problem was reported, the incident will not be covered under the policy.

Even if you currently possess the coverage, any work that you did before the initial coverage start date, will not be covered under the policy. This insurance is also a great selling point. Customers that understand E&O insurance and know that you have this type of coverage will feel more comfortable with hiring your company.

Fraudulent Claims

All service providers are at risk of fraudulent claims. While there is no way to avoid these claims, you can protect your business with errors and emissions insurance. Any client that you have conducted business with in the past and present can file a claim with the engineer’s insurer. When the claim is received the insurer will immediately contact the engineer to make them aware of the claim and see how they want to proceed. It is always in the engineer’s best interest to fix the problem, but this is not always possible, since there are some situations that are more complex.

It is important to note that a client can hire a lawyer to represent them at any time. If the issue is not resolved in a timely manner, there is a good chance that the complainant will file a lawsuit against the engineer. If the engineer is covered under an E&O insurance policy from an insurance company in canada, they will be able to rest a little easier, since the policy will cover the judgment, settlement and defense costs.


Simple Strategies For Auto Dealers Who Wish To Avoid Surety Bond Claims

Surety bonds for auto dealers

Most Canadian provinces require auto dealers to post a dealer bond. This involves selling, leasing, and trading of new and used vehicles. If you are amid planning a dealership startup, you will need to contact the appropriate government entity. If you sell 5 vehicles or more a year, you are classified a dealer in Canada, but this does not mean that you will not need a dealer license and bond, if you commence to sell less. Below, you will discover a few simple strategies to avoid surety bond claims.



Claim Damages

Bonded companies are always going to be at risk of having a claim filed against their bond. Not only are these claims devastating to your company, but if the claim is validated, you will find it nearly impossible to conduct further business. The bond company will pay the complainant the full amount of the bond and you will be forced to repay the surety Bond Company. This will be a devastating monetary loss, plus your reputation will be ruined. In many cases, the business owner will find it nearly impossible to get approved for another bond.

Fight The Claim

It is a fact that many claims filed against surety bonds are illegitimate, but this does not make them any less stressing. Nine times out of ten, the complaint will revolve around timing, but this is not always the case. If you, as the principal of the bond, feel that the claim is fraudulent, you can fight the claim. Provide efficient proof to the surety company and speak on your behalf. Never, just take these allegations lying down, if you are not at fault.

Communication Is Key  

At the time, the client voices a complaint against your company you should immediately open up a door of communication. Early communication is the key to preventing the problem from becoming work and if you can resolve the issue now, you could save yourself a lot of grief later on down the road. Most complainants are open to reason, so do not pass this opportunity up.

Bond Meeting

Several types of surety bonds will set up a meeting at the first admission of default. The principal, obligee, and surety claims professional will need to attend the meet. This meeting will address any problems that the contractor may be experiencing, in trying to fulfill the terms of the contract. Many times, these meetings are scheduled due to lack of funds, which can be remedied by the obligee making future payments. These joint checks will be used to fund the project, so it can be completed in a timely manner.

Dealer License

In order to be approved for a dealer license, you will need to post a surety bond first. When completing the licensure application, you will need to attach a copy of the bond and submit it along with the application to the business licensing board.


One of the best ways to avoid surety bond claims is to comply with the provincial and territorial statues pertaining to your dealer licensure. Of course, this will not be a guarantee protection from claims, but it will definitely be a great place to start.

How To Keep Your Surety Bond In Good Standing

Lets Start

If you’ve ever been forced to acquire a surety bond, you’ll realize that the process is a little bit stressful. Once you’ve become more familiar with it, the stress will diminish, but can still be a daunting task. Once you’ve acquired your surety bond, you’ll want to make sure that you keep it in good standing, so you won’t have to repeat the same steps again. Below, you’ll learn precisely how to keep your bond in good standing and valid.


When it comes down to it, your surety bond isn’t going to last forever. Although it will depend on the specifics of your contract, the mass majority of bonds will expire after a year. With this in mind, you’ll want to put in a substantial amount of effort putting measures in place to ensure you do not forget your renewal date. Be sure to mark the date down on your physical or digital calendar!

Obeying The Law

It probably already goes without saying, but if want to keep your surety bond in good standing you are going to have to adhere to all the Canadian standards and laws, which govern your profession. In the event that you do not follow these guidelines, there is a good chance that you will not only loose your bond, but also you can even loose your license. This pretty much means that you could loose you whole business altogether. If you are caught breaking the law, you will lose your bond and the refund will be forfeited! Suffice to say, you should behave and do your best to abide by the Canadian laws and regulations.

Avoiding Claims, If Possible

While, it is nearly impossible to avoid all surety claims, there are ways to keep them to a minimum. It is a fact that 25-40% of the claims filed by clients on surety bonds is erroneous and holds no merit. Of course, this is not the case, because you still have the other 60-75%. One of the best ways to avoid a claim, being filed against your surety company is completing projects in a timely manner.

If at any time, you feel that the contract is reaching a compromising position, you should immediately contact the client. There is nothing that will make the client more upset than not meeting the deadline.

Deliver Satisfaction

The biggest problem, which often leads to bond cancellation, is failing to perform in a satisfactory manner. With this in mind, you should always do your best to serve your clients in a worthwhile manner. If you’re able to do this, you will be able to prevent claims and will not have to worry about expenses related to them. Also, be sure you remain communicative and keep the client aware every step of the way.


Remember that building a solid relationship with your surety provider is best. If you’re able to find a good provider, you’ll want to maintain the relationship, so they don’t drop you prematurely. In order to do this, you should follow the law, serve your clients in a satisfactory manner, and renew your bond, before it expires.

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