Do You Need Excess Coverage After Retirement?

As a retiree, you remain responsible for work performed prior to retirement. Although mandatory insurance coverage applies as long as the occurrence took place during the period in which the member was insured, excess coverage does not apply.  Like most liability policies, our excess liability program is “claims made”, meaning insurance needs to be in place when a claim is made and not when the work is done. It is not transactional based coverage. Statutes of limitations provide for a time period in which to present claims, and firms that do not renew their insurances will not have coverage for losses reported after the expiry date of the policy. As such, coverage purchased out of the need for a single transaction will need to be purchased as long as the possibility of a claim still exists.  

As the value of client’s transactions increases over time, so too does the need to secure adequate levels of Errors and Omissions (E&O) insurance. One large claim could quickly erode the primary policy, leaving you to significant personal liability.

CLIA’s Voluntary Excess Program (VEP) offers the flexibility of additional coverage limits, extending up to $35M per claim, with an annual aggregate limit of $35M. Coverage options under the VEP include limits of $1M, $2M, $3M, $4M, $6.5M, $9M, $14M, $19M, $24M, $29M, and $34M, in excess of a $1M base.

Factors to consider when determining whether you need excess coverage after retirement:

• The type of transactions and the potential impact on your clients;

• The size and frequency of large transactions;

• Whether former associates and partners have coverage that is either inadequate or excludes their past activities; and

• Whether the impact of the advice you’ve provided (and therefore potential liability) may grow over time.

Retirees should continue to renew their excess coverage for however long they believe there is a possibility of a claim.

Don’t Forget: 

• Retirement: Retiring from practice does not exempt you from the risk of liability. You continue to be liable for the professional services you provided in the past. If you were at a firm that purchased excess insurance through CLIA, you retain that excess coverage so long as your former firm maintains that excess policy. If your previous firm dissolves or ceases to renew excess coverage, you may be at risk if a large claim arises.

• Retroactive Date for Claims: Your excess coverage only applies to claims that occurred when you or your firm has CLIA excess coverage in place. For example, if your firm has continuously had CLIA excess coverage in place for the last 10 years and the claim occurred 8 years ago, the claim would likely be eligible for coverage under the current insurance policy. However, if the claim occurred 15 years ago, before the CLIA excess coverage was in place, then typically the claim would not be eligible for coverage under the current insurance policy.

• Low Investment in Added Security: Professional liability insurance is the cheapest form of insurance that there is. Lawyers can purchase $1M in coverage for $500.00 (2023) and the price per million goes down as the limit increases. For example, in 2023, $19M coverage = $102.00 premium/million (total $1951.00 premium).

• Not Just for ‘Higher Risk’ Areas or Large Firms: All legal work can have exposure to large value claims. Don’t equate the amount charged to a client with the potential claims amount if an error occurs. Even ‘small matters’ like a will prepared by a small firm in a rural community could result in a claim over the $1 M limit.

Eligibility for Retiree Coverage

• Must be retiring as a current member of CLIA’s VEP – either as a sole practitioner or as a member of a firm.

• Must apply for status change with your Law Society.

• Coverage is limited to matters arising out of Professional Services rendered prior to retirement.

Retiree Discount:

As a retiree you remain responsible for work performed prior to retirement. We want you to be at ease during your retirement. CLIA provides all retired inactive lawyers with a 25% discount on excess errors and omissions insurance.

For more information see our website.

Need More Information?

If you have any questions, please contact us at service@clia.ca.