Construction work was being carried out on a school during the summer months, when vandals broke into the school at night and started a fire causing damage in different areas of the insured project. Cleanup and repairs to the project needed to be completed prior to the school opening in the fall.
Builders Risk
A general contractor was hired to renovate and expand a sports centre. The driver of a boom truck damaged the steel cladding of the building while trying to remove temporary propane tanks from the project site. The truck had been rented from a company hired by the insured’s mechanical subcontractor.
During the construction of an addition to an existing facility, a subcontractor unknowingly struck an exposed cooling coil which began to leak.
A significant amount of water leaked into the facility and went undiscovered, as it was hidden in the cavities of the structure. Once the leak was discovered, there was physical evidence of impact damage to the coil.
Thieves managed to gain access to a secured project site for a medical treatment facility and stole a large quantity of copper wiring and piping. Some of the materials had already been installed by an electrical subcontractor working on the site. The thieves specifically targeted the copper-based products as they are a highly sought-after commodity for the high recycling value at recycling centres.
During the installation of a new steel girder and concrete bridge, the steel girder assembly slipped off its supports, causing severe damage to the end sections of the steel beams. The cause of the loss was determined to have resulted from a poorly designed installation procedure. The damaged sections of the steel beams were removed and replaced with the aid of two large mobile cranes.
An owner and general contractor planned to begin the construction of three hydroelectric projects. Torrential rains caused flooding and damage to cofferdams and power stations, which also caused a delay in the start-up of the project. A claim for over $12 million was made for the physical damage to the project, as well as the lost revenue from the inability to sell electricity for a period of time.
A contractor was retained to act as a general contractor for a project involving the construction of a commercial retail building. The contractor stored the interior finishing materials for the project in his warehouse a few kilometres from the site of the project. A fire broke out in the warehouse, completely destroying its contents.
Directors & Officers Liability
The following claims examples outline scenarios where a claim may occur under a Directors & Officers Liability policy.
Note: These claims examples are for illustrative purposes only. Please remember that only the insurance policy governs the coverage terms, conditions and exclusions.
Bankruptcy
Directors of a company were held personally liable for the unpaid wages of salaried employees of the company as well as unremitted source deductions and taxes following the company’s bankruptcy.
Misrepresentation
The chief financial officer and directors of a company were sued for misrepresenting the financial state of the company to lenders immediately prior to bankruptcy of the company.
Employee allegations
Allegations were made by an employee that the employer informed third parties that he was incompetent, leading to a hostile work environment.
Defamation
Following the dismissal of a senior employee, several directors were sued by the individual for defamation after the release of an “all staff” memo describing the dismissal.
Failure to increase death benefit
When an employee died, several directors were sued by the employee’s spouse for failing to increase the limit of the death benefit, as had previously been agreed.
Negligence and breach of trust
After filing for bankruptcy, a non-profit organization was sued for negligence and breach of trust for failing to repay a temporary operating fund provided by another organization for a fundraising event.
Unethical conduct
A former member sued the board of a professional association alleging that the board of directors had targeted her, and that they had not followed the organization’s bylaws, when they revoked her membership for unethical conduct.
Wrongful termination – example 1
After being terminated for sexual misconduct and harassment, a senior executive sued the non-profit organization for wrongful termination, and the directors and officers for alleged interference with contractual relations.
Wrongful termination – example 2
As part of a corporate reorganization, a large non-profit organization terminated the employment of a long-term employee. The employee sued the organization alleging wrongful termination. The employee also alleged that she had been defamed as a result of a written communication that had found its way into the hands of individuals outside the board of directors of the organization.
Negligent misrepresentation
A non-profit organization successfully applied for, and received, government funding for the purpose of organizing and hosting an event. Unfortunately, the expenses incurred for the event far exceeded the revenues received. After a government audit, it was determined that the funds had not been used for the purposes described in the funding application. The government commenced an action seeking damages due to the alleged negligent misrepresentations in the application documents and for the alleged breach of fiduciary duty on the part of the directors of the organization.
Breach of fiduciary duty
A member of a professional association sued the association and several of its directors and officers as a result of a disagreement with respect to licensing requirements. The member sought damages as compensation for the alleged breach of fiduciary duty, defamation and interference with economic interests.
Employment Practices Liability
The following claims examples outline scenarios where a claim may occur under an Employment Practices Liability policy.
Note: These claims examples are for illustrative purposes only. Please remember that only the insurance policy governs the coverage terms, conditions and exclusions.
Allegations were made by an employee that his employer had created a hostile work environment by failing to deal with bullying co-workers.
A senior employee, whose employment was terminated, sued several directors for defamation following the publication of an “all staff” memo describing the termination.
An organization was faced with a complaint brought under human rights legislation by an employee who alleged that she had been discriminated against based on her race, colour, ancestry and ethnicity when she had been passed over for several promotion opportunities.
A senior executive’s employment was terminated after allegations of sexual harassment were made against him by another employee of the organization. The executive sued his former employer for wrongful termination.
Environmental Liability
The following claims examples outline scenarios where a claim may occur under an Environmental Liability policy.
Note: These claims examples are for illustrative purposes only. Please remember that only the insurance policy governs the coverage terms, conditions and exclusions.
Toxic mould formed after water damage cleanup
A restoration contractor was hired to clean up and remediate a condominium complex after a water pipe had ruptured causing water damage to many suites. After the job was completed, the contractor was sued when it was discovered that areas of drywall and insulation were wet, and toxic mould had formed, resulting in bodily injury.
Failure to disclose severe groundwater contamination
An environmental engineer, retained by a prospective land purchaser, was sued for failure to disclose severe groundwater contamination in her environmental site assessment, resulting in financial loss and defence costs.
Fractured fuel supply line
A general contractor was hired to build a new highway in Northern Canada. A temporary residential camp was set up for the workers and powered by a diesel generator. Snow and hay bales were placed around the generator to act as a sound barrier; however, the extra weight resulted in a fractured fuel supply line, which allowed 8,000 litres of diesel fuel to escape into the environment.
Environmental fine for pollution of river
During construction of a new aquatic centre, a piling subcontractor struck and ruptured an existing water main, which led to the discharge of approximately 12 million litres of chlorinated water into a nearby river. In addition to cleanup and monitoring costs, the general contractor was fined under the Fisheries Act.
Gasoline contamination
Gasoline from a leaking underground storage tank contaminated a service station’s site and also migrated onto neighbouring property and drinking water wells via the storm sewer.
Oil release
A trailer storing barrels of oil at a manufacturing facility flipped over when a support leg failed, resulting in a release of oil from the damaged barrels.
Fuel supply line broken by fallen ice
A release from an exterior above ground fuel tank occurred as a result of ice falling from an adjacent roof onto it and breaking the fuel supply line between the storage tank and boilers.
Equipment leak
A piece of machinery was moved from the shop floor at a manufacturing plant as part of a process line re-organization, at which point a leak was discovered emanating from the equipment into an unsealed trench pit.
Accidental discharge of diluted residual material
A manufacturer of industrial cleaning compounds experienced an accidental discharge of approximately 16,000 litres of diluted residual material from an on-site blending tank into a storm sewer and neighbouring river.
Errors & Omissions
The following claims examples outline scenarios where a claim may occur under an Errors and Omissions policy.
Note: These claims examples are for illustrative purposes only. Please remember that only the insurance policy governs the coverage terms, conditions and exclusions.
Building code standards not met
A technologist was retained to design residential homes but the design was not in conformity with the applicable bylaws and building code provisions. All homes required a redesign as a result.
Third party claim
A houseguest incurred severe injuries when she slipped and fell down a flight of stairs. The technologist was third partied into the claim as he was the designer of the home where the incident took place. The allegations specified there were no handrails on the staircase.
Roof replacement
A technologist was retained to provide consulting services for a roof replacement on an office building. After a heavy rainstorm, water entered the building from different locations and caused damage. The technologist was sued by the tenants of the building along with the owner, the contractor and a structural engineer.
Calculation error
Due to a calculation error in a residential design completed by a technologist, the space allotted for a staircase was insufficient to allow it to be built in accordance with applicable building code, and a substantial redesign was required.
Insufficient support of deck railing
A deck railing designed by a technologist collapsed due to insufficient support to the rail posts, resulting in injury to a third party.
Negligence
A technologist was accused of negligence when features designed for a commercial property resulted in significant drafts, requiring unexpected HVAC additions to remediate the unintended effect.
Hospital renovation
A project manager was retained to supervise the renovation work being done at a hospital. The hospital suffered major water damage due to the improper installation of 53 showers and sued the project manager for failing to properly supervise the construction work.
Site injury
An occupational health and safety consultant was retained by a developer to report on safety precautions and risks at a condominium development site. The developer was sued following a major injury on site. The developer issued a third party claim against the occupational health and safety consultant alleging that the consultant’s recommended and implemented safety measures failed to adequately protect site personnel.
Installation error
A quality control inspector was retained to perform quality control in the context of the construction of multiple office towers. The owner discovered the windows had been improperly installed and claimed against the inspector and other implicated parties for the costs of reinstalling the windows correctly.
Failure to follow proper legal procedures
An individual purchased and financed a vehicle through a car dealership. Soon after, the purchaser fell behind on his payments and a collection agency repossessed the vehicle. The purchaser contested the seizure and sued the collection agency for damages alleging that he received no prior warning from the collection agency regarding the debt collection. In fact, it was only after the vehicle was repossessed that he received a repossession warrant.
Failure to properly assess risk of investment
A mortgage broker invested in a number of mortgages on behalf of his client, the lender. The mortgages went into default and the lender lost its investment when the properties were sold. The lender sued the mortgage broker for failure to assess the borrower’s ability to repay the mortgage loans and for failing to properly assess the value of the properties being mortgaged.
Internal bleeding caused by acupuncturist
An acupuncturist provided treatment to improve the degradation of vision in his patient’s right eye. A needle accidently penetrated the patient’s eyeball causing internal bleeding. Emergency laser eye surgery was performed to repair the eyeball. The patient sued the insured acupuncturist alleging the needle rendered him permanently blind in the right eye.
Punctured lung caused during acupuncture
An acupuncturist provided acupuncture treatment for a patient’s back and hip problems which included inserting a needle into the location of the patient’s shoulder pain. After the last treatment, the patient developed chest pressure and shortness of breath and subsequently learned he suffered from a punctured lung due to the acupuncture treatment. The patient sued the acupuncturist alleging the acupuncturist was negligent in rendering the treatment.
Ultrasound negligence
A patient alleged that a sonographer had been negligent when performing a routine ultrasound during her pregnancy. More specifically, the patient alleged that the sonographer failed to detect a rare heart condition in the fetus. The sonographer, as well as the hospital and treating radiologist were all sued.
Blood sample collection error
A patient alleged that she suffered damages to her biceps’ tendons following the collection of a blood sample for testing at a diagnostic laboratory. She sought damages for constant discomfort and the necessity to change her career as she had lost significant range of motion of her arm.
Failure to consider pre-existing condition
A homeopath was treating the patient for nasal allergies. The patient alleged that the homeopath administered a low dose of arsenic which caused a severe asthmatic attack. The patient sued the homeopath, alleging that the treatment should not have been provided given his pre-existing medical condition.
Improper care
A nurse was retained to provide post-operative in-home care to a patient suffering from ulcers. The patient’s ulcers became infected, which resulted in the patient not making a complete recovery and then allegedly causing a loss of employment, loss of enjoyment of life and increased medical expenses. The patient sued the nurse alleging improper care.
Negligence
A nursing placement agency assigned a nurse to provide live-in 24 hour per day home care to a patient suffering from Alzheimer’s disease. The patient managed to leave the home on her own and was found outside hours later having suffered injuries due to a fall. The patient and her family sued the nursing placement agency for negligence alleging that the agency failed to employ qualified personnel and failed to ensure that the nursing care met the standard appropriate for the patient.
Failure to provide adequate instruction
As part of a patient assessment an occupational therapist recommended that the patient use a bath mat when showering. After a slip and fall on the bath mat in his shower, the patient commenced a lawsuit against the occupational therapist alleging she recommended the use of dangerous equipment and failed to instruct him on how to use it.
Religious discrimination and racism
An occupational therapist conducted a home assessment following an accident for which the patient was receiving benefits. The patient filed an application with the human rights tribunal seeking compensation from the occupational therapist alleging that his behaviour and report were tainted with religious discrimination and racism.
Failure to obtain informed consent
An optometrist was consulted by a patient inquiring about laser eye surgery. After proceeding with the surgery, the patient suffered from a rare side effect. The patient claimed damages, alleging that the risks of the surgery were not properly explained and that he would have refused to proceed with the surgery if he had been informed of all the risks.
Failure to properly assess lens prescription
An optometrist faced a breach of standards of practice complaint lodged with the disciplinary committee of the provincial regulatory body by a former patient. The patient alleged that the optometrist failed to increase her lens prescription, leading to eye strain and headaches.
Dispensing error – example 1
While filling a routine prescription, a pharmacist accidentally dispensed double the requested dosage. The patient used this incorrect dosage for three months before the mistake was discovered. The patient instituted a lawsuit against the pharmacist alleging serious and permanent injury.
Dispensing error – example 2
A pharmacist dispensed an incorrect dosage of an antidepressant drug to a patient. The patient sued the pharmacist for this error, claiming that it caused severe mental stress, mood swings and aggressive outbursts, which ultimately led to the patient losing his job.
Failure to provide appropriate treatment
A physiotherapist acted as a trainer for a local soccer club that was hosting a tournament. When a player dislocated a hip, the insured physiotherapist treated the injured player, providing urgent care at the scene. A year later, the player claimed against the insured physiotherapist for failing to provide appropriate treatment.
Calculation error – example 1
A benefits consultant was retained by a manufacturing firm to calculate the long-term disability benefits due to an employee. The consultant mistakenly based his calculations on the employee’s prior year’s salary instead of his current income. As a result, the employee received a lesser amount of disability benefits than he expected and sued the manufacturing firm for loss of income. The manufacturing firm paid for the correct loss of income but pursued the consultant to reimburse its legal costs alleging the lawsuit was entirely the result of the consultant’s miscalculations.
Calculation error – example 2
A financial consultant was retained by a client to provide him with a quotation for a certain level of retirement income. Based on the quotation, the client elected to retire soon thereafter. When the client realized the monthly pension benefit he was receiving was less than the amount the consultant had quoted, he sued the consultant alleging the consultant omitted an adjustment in his calculations.
Failure to provide adequate coverage
An insurance broker was mandated by his client to obtain an errors and omissions policy for his employees (nurses) who worked as case managers for insurance companies. Instead, the broker provided a policy which covered nursing services only. After coverage was denied by the insurer for a claim against one of the employees, the client commenced a lawsuit alleging the broker failed to provide the proper coverage.
Negligent misrepresentation
An insurance broker obtained a commercial property package policy for a client, including blanket coverage for multiple locations. The client suffered a fire loss at one location that resulted in a financial loss that was greater than the insurance limits. After the loss, it was determined that the client had misunderstood the policy coverage and thought the limits provided were per location and not blanket coverage. The client issued a lawsuit alleging negligent misrepresentation and claimed damages for the shortfall.
Breach of duty
An insurance broker obtained personal and vehicle information from the client for the purpose of obtaining a new auto policy. However, the broker failed to submit the application to the auto insurer and subsequently, a policy was never issued. After the client and his passengers were involved in a motor vehicle accident, the injured passengers sued the client, who then initiated a claim against the broker, alleging breach of duty in failing to obtain coverage.
Failure to provide adequate coverage
An insurance broker obtained a commercial auto policy with cargo coverage for the client’s business operations. The client’s application indicated that five per cent of their business was from transporting alcohol. The client suffered a theft of one of his transport trucks and its contents, which were cases of alcohol. After the insurer denied the contents portion of the claim, the client commenced legal action alleging that the broker failed to provide adequate coverage and failed to properly assess the risk.
Negligent advice
A paralegal was retained by the victim of a motor vehicle accident. Based on the paralegal’s recommendation, the client accepted an all-inclusive settlement from the automobile insurer. The client instituted a lawsuit against the paralegal for alleging negligent advice which caused him to accept an inadequate settlement, preventing him from receiving additional accident benefits.
Failure to obtain consent
A paralegal was retained by a driver charged with careless driving following a motor vehicle accident. The driver instituted a lawsuit against the paralegal for settling his claim with the motor vehicle insurance company without his consent, and for failing to apply for a non-earner benefit under the motor vehicle insurance policy prior to settlement.
Failure to warn of limitation period
A paralegal advised a driver involved in a motor vehicle accident that he may be able to sue the at-fault party. When the driver attempted to do so, he was informed he was out of time. The driver instituted a lawsuit against the paralegal for failing to warn him of the limitation period.
Printing error
A printer was retained to insert an advertisement into a magazine. The printer placed the advertisement upside-down which could only be read by inverting the magazine. As a result, the advertiser issued a demand letter to the printer seeking the printing and advertising costs it paid to the magazine.
Libel
A newspaper published an article regarding a municipal politician involved in a number of local scandals. The article made reference to the politician as being “infamous.” The politician instituted a Small Claims Court action against the newspaper alleging libel.
Breach of copyright
A publishing company used images from a popular children’s storybook in its own publication. Upon discovering this fact, the publisher of the original children’s storybook sought compensation from the publishing company for breach of copyright laws.
Failure to perform background check
A human resources consultant was retained by a large company to screen potential candidates for a senior managerial position. The company dismissed the chosen candidate after less than a year and was sued for wrongful termination. The company in turn commenced a third party claim against the human resources consultant, alleging that he had failed to conduct a thorough background check on the candidate.
Undervalued property
An appraiser was retained by a property insurer to assess the value of a private dwelling. The house was destroyed in a fire and was discovered to be significantly underinsured, leading to a claim against the broker and the appraiser for the loss.
Failure to identify commercial use
An appraiser was retained by a property insurer to assess the risk of a residence with an attached garage. When the property was destroyed in a fire, coverage was denied to the owners of the property for failure to disclose its commercial usage. The owners sued the property insurer who in turn sued the appraiser for failing to properly identify the commercial use of the property.
Failure to provide services
An immigration consultant was retained to file an application for permanent residency. The application was never received by Immigration, Refugees and Citizenship Canada. The client commenced a claim against the immigration consultant, alleging he was negligent in his handling of the application.
Negligence in provision of services
An immigration consultant filed an online work permit extension on behalf of a client but failed to submit additional documentation within the specified time frame. As a result, the client’s work permit was not extended and the client was forced to apply for the restoration of his work status. During the lengthy restoration process, the client was not permitted to work, resulting in a claim for loss of income against the immigration consultant.
Failure to verify
A cosmetic company retained a chemist to provide a formula for lipstick. The chemist prepared the formula without verifying it and provided it to the cosmetic company to begin production. The cosmetic company later sued the chemist alleging that the formula did not produce the desired lipstick product rendering it unmarketable.
Professional Liability for Architects & Engineers
The following claims examples outline scenarios where a claim may occur under a Professional Liability policy for architects and engineers.
Note: These claims examples are for illustrative purposes only. Please remember that only the insurance policy governs the coverage terms, conditions and exclusions.
Product substitution issue
An architect was retained to design a residential property. Based on the contractor’s recommendation, the architect agreed to a product substitution for exterior fixtures even though the architect had no experience with this product. Years following occupancy, the owners issued a claim against the architect alleging that the product, as specified, failed and was intended specifically for interior use only. As the only design professional retained, the architect was held to a higher standard of care than the contractor and faced considerable exposure for the costs associated with repairs.
Negligent design
An architect of a commercial development filed a lien against the property in an attempt to recover outstanding fees from the project owner. The owner issued a counterclaim alleging negligent design. The owner also brought the architect into a pre-existing lawsuit alleging that the architect failed to meet the terms of the construction management contract and directed work without written approval.
Failure to consider the instability of a site
A developer commenced an action against an architect when it was found, after review by the city’s planning committee that two planned duplex units could not be built without major strengthening of the foundation. This process resulted in high cost due to the unstable nature of the site. The developer claimed for loss of land value, loss of profit and interest, delays in obtaining city approval and non-completion of the project.
Under-design of bridge
An engineer approved design changes based on abutment foundation materials used in the building of a small bridge, which resulted in partial destruction of one abutment foundation after a heavy rainfall. The engineer was sued for the under-design of the bridge.
Insufficient field review
Changes to a civil engineer’s recommended excavation method for a damaged municipal drain resulted in drain collapse when inappropriate backfill processes were used. The engineer was sued by the municipality for insufficient field review where the backfill process could have been corrected in time to avoid damage.
Deficient piping
The scope of a mechanical engineer’s field review responsibility was called into question when deficient piping was used in the development of a new residential building resulting in water damage to the property.
Design errors
An engineer was held liable for design errors in the air-handling system for a new municipal library. The municipality sued for costs related to the repair of the mechanical system.
An engineer’s project triumphs and challenges— A claim example—inspired by true events
Recent years have revealed a concerning trend, that mechanical engineers working on residential projects, especially multi-unit (condo) projects, have seen a significant rise in both the frequency and severity of claims. This insight comes from Victor Canada's extensive experience in managing professional liability claims. In this animated video, we dive deeper into this issue with a real-life claim example inspired by true events. This claim story highlights the importance of Architects & Engineers Professional Liability coverage.
Technology Insurance
The following claims examples outline scenarios where a claim may occur under a Technology Liability policy.
Note: These claims examples are for illustrative purposes only. Please remember that only the insurance policy governs the coverage terms, conditions and exclusions.
A software consulting company was sued for negligence and misrepresentation with respect to the design of a software program that was allegedly not compatible with the plaintiff’s computer system and did not perform as represented.
A web hosting firm for a dental clinic faced remediation expenses which included credit monitoring for affected individuals when their network was hacked and personal information of over 500 patients was compromised.
A software developer was served with a claim by a U.S. client when the computer-based point-of-sale software they provided allegedly did not function properly, leading to both lost sales and lost customers.