Area of Law: Private Investigation
Answer # 1004
Are private investigators required to be insured?Region: Ontario Answer # 1004
Mandatory General Liability Insurance
To work as a private investigator in Ontario, you must have a licence, and you must either work for an agency, or become licensed as an agency yourself. Private investigation agencies are required by law to carry general liability insurance.
Under Ontario’s Private Security and Investigative Services Act (PSISA), the minimum general liability insurance requirements for private investigation agencies is $2,000,000.
General liability insurance, also known as Commercial General Liability insurance, covers risk of bodily injury or property damage to both clients and employees in the course of doing business. The insurance provider must be licensed under the Insurance Act for the kinds of liability insured, and in the amounts prescribed.
Businesses applying for a private investigation agency licence with Ontario’s Ministry Of Community Safety & Correctional Services, must provide a valid certificate of general liability insurance within 30 days of the application being approved. Also, if renewing its licence, an agency must submit a certificate of general liability insurance in the required minimum amount of $2,000,000 with its renewal application.
Errors and Omissions (E&O) Insurance
Private investigators often choose to carry additional insurance, known as Errors and Omissions, or E&O, insurance. Also commonly referred to as Professional Liability insurance, E&O insurance protects professional businesses, such as private investigation agencies, if they are sued by a client who suffered financial losses or damages as a result of the investigator’s errors, omissions or negligent acts while conducting business.
What types of situations does E&O insurance cover?
There are many examples of when, in the course of doing business, private investigators could find themselves responsible for the financial loss of another person or business.
For example, a client could suffer damages if:
- critical information was not provided by the investigator,
- the information provided was incorrect,
- the investigator violated someone’s privacy, or
- something the investigator said or wrote was considered to be defamatory.
Damages for such errors or omissions can be high, such as:
- if someone is considering a new business partner, or investing in a new business,
- during a child support case,
- in relation to a marriage contract, or
- during a workplace disability investigation.
It is advisable for private investigators to obtain E&O insurance because it: (i) protects the investigator from having to pay for damages caused by such errors and omissions, and (ii) enables the client to obtain compensation for their loss.
Other types of insurance available
Private investigators may choose to purchase many other types of insurance that, while not required, are recommended and are often purchased by small businesses. This includes:
- Business interruption and property insurance,
- Workers compensation or disability insurance for employees,
- Directors’ Liability insurance, and
- Legal insurance – covers the cost of legal services, and/or legal fees incurred in a dispute.
For more information about E&O insurance, or to purchase a policy, contact Ai Errors and Omissions Insurance.
To have someone conduct a background check or other investigation, contact our preferred Investigators, Smith Investigation Agency .
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