Personal Corporation Coverage
Your agent's E&O insurance was intended to protect you from any legal action that might be brought against you. Under Common Law and the Civil Code (Quebec), professionals are held to a higher standard by virtue of their accreditation and training.
If you have set up a corporation under which you conduct your business, this firm could also be named in any action against you. If you have licensed agents other than yourself working in your firm (including licensed administrative assistants), your firm’s exposure to claims risk is higher. More clients also means greater exposure.
In certain circumstances, the APA E&O coverage you carry can be extended to cover your corporation.
Protection for "personal corporations" is included under the APA program
When you purchase your individual coverage (A, B, C) with the APA, coverage for "Personal Corporation" is automatically included. This means that, if eligible, the agent's business is considered to be an additional insured under the APA agent's E&O coverage.
However, not all corporations are the same; some, depending on their ownership structure, may not qualify for personal corporation coverage, and would therefore require separate corporate coverage.
Please read the information provided here to ensure your personal corporation conforms to the APA Master Policy. If you are unsure, please contact the APA member service team.
A personal corporation is defined as a corporation owned by the certificate holder, or jointly with their spouse, provided that such corporation does not conduct any business independent of the certificate holder, nor employs any other licensed or unlicensed agents, but only with respect to its liability as it might arise out of the certificate holder's activities specified as covered elsewhere in the policy.
Please refer to the master policy wording for actual policy definitions and for business activities covered
A brief interpretation of what is and is not a personal corporation ...
- a licensed Life agent
- a sole proprietor who operates under the trade name John Doe Financial Services
- eligible to be added to his APA plan agent's E&O Certificate of Insurance
- a licensed Life agent
- a corporation through which he runs his life business, Jim Doe Insurance Ltd
- owns the company jointly with his wife, who is unlicensed
- qualifies as a personal corporation and can be added to his APA plan agent's E&O Certificate of Insurance as an additional insured
- a licensed Life agent
- a corporation through which he runs his life business, Jerry Doe Insurance for Life Inc, owned by a family trust
- does not qualify as a personal corporation because it is not owned by him solely or jointly with his unlicensed spouse
- required by the provincial regulator that issued his Life license to carry a separate corporate E&O policy because he can't include his corporation under his agent's E&O coverage as an additional insured
If your Corporation isn't eligible to be an Additional Insured under your APA E&O Agent's E&O Coverage.
If your corporation isn't eligible to be added as an additional insured, your firm has limited protection under your agent's E&O coverage. In fact, the coverage for your firm is limited to "vicarious liability," provided you've declared your firm on your agent's E&O insurance application.
What is "vicarious liability"?
In Common Law and under the Civil Code, the doctrine of vicarious liability establishes that in an employer-employee or agency-agent relationship, the employer or agency may be held liable for the conduct of its employees, without proving actual negligence.
However, should a claim be brought against your firm alleging negligence ("direct" liability), such as allegations of negligent hiring, negligent supervision or training, your agent's E&O policy won't respond to defend your firm because this does not constitute vicarious liability. Neither will the policies carried by any of your employed or contracted agents respond for direct liability allegations. Also, where a licensed agent has left the firm, or where the agent has failed to maintain individual E&O coverage, and a suit is brought against the firm alleging negligence on the part of the former employee, your firm could be called upon by the courts to respond. Under these circumstances and many other situations, your agent's E&O policy won't respond to protect your firm. Any legal expenses or court awards would be borne entirely by your firm.
Where your corporation is ineligible to be covered an additional insured, we recommend consideration of a separate corporate E&O policy. The APA has solutions for firms like yours.