June 1, 2023
Professional liability insurance
To be authorized to pursue activities, you must hold valid professional liability insurance that is consistent with regulatory requirements.
Professional liability insurance covers, within the limits of the purchased coverage, insured firms, independent partnerships and independent representatives against the monetary consequences of their liability or that of their employees, partners, mandataries and trainees in the event of error, omission, fault or negligence committed when carrying out their activities.
Professional liability insurance does not cover intentional fault.
On this page
- Regulatory changes and transitional measures
- Registrant’s responsibilities and the AMF’s expectations
- Failure to maintain insurance and possible penalties
- Laws and regulations
- Definitions of terms relating to professional liability insurance
Registrant’s responsibilities and the AMF’s expectations
“Registrant” means any firm, independent partnership or independent representative governed by the Distribution Act and any firm registered in mutual funds or scholarship plans.
As a registrant, you are responsible for maintaining professional liability insurance that is consistent with regulations at all times. You must also ensure that any representative acting on your behalf without being an employee maintains liability insurance coverage that is consistent with regulatory requirements.
You must therefore put rigorous processes in place within your business to avoid gaps or interruptions in insurance coverage. Examples of good practices include :
- Requesting and keeping all your proofs of insurance, including those of all representatives attached to your firm
- Implementing a tool to track insurance policy expiries
The AMF may request proof of maintenance of professional insurance at any time.
Failure to maintain insurance and possible penalties
The term “firm” is used here solely for ease of reading and should be read as also referring to independent partnerships and independent representatives.
Failure to maintain professional liability insurance that is consistent with the Distribution Act This link will open in a new window and its regulations has serious implications.
The AMF may suspend the registration of a firm if it or any of its representatives do not maintain professional liability insurance that is consistent with regulatory requirements at all times or if it does not provide the proofs of insurance required by the AMF within the prescribed time period. The AMF may cancel a firm’s registration if it has failed to submit such proof for a second or subsequent time.
Firms can therefore lose the right to practise if they fail to maintain a professional liability insurance contract that is consistent with regulations.
Steps for the suspension or cancellation of registration
- Notice issued by the AMF prior to a decision
A firm that fails to comply with its obligation to maintain professional liability insurance will receive a notice from the AMF stating its intention to issue a decision to suspend or cancel its registration.
The firm will then have 15 days from receipt of the notice to submit its observations and any requested document(s) to the AMF via E-Services or by mail.
- Suspension or cancellation of registration
Subject to any observations and documents submitted to it, the AMF will send the decision to the firm that has failed to submit proof of maintenance of professional liability insurance.
The firm and all its representatives will then have to cease to pursue activities until the suspension is lifted.
Decisions rendered by the AMF are published in its Bulletin.
- Procedure for lifting the suspension of registration
The suspension will be lifted as soon as the AMF receives the requested document(s). Confirmation that the suspension has been lifted will be sent to the firm.
Laws and regulations
Links to sections pertaining to professional liability insurance:
|Act respecting the distribution of financial products and services
Sections: 76 This link will open in a new window, 78 This link will open in a new window, 83 This link will open in a new window, 131 This link will open in a new window, 132 This link will open in a new window, 136 This link will open in a new window
|Regulation respecting the pursuit of activities as a representative
|Section 17 This link will open in a new window
|Regulation respecting firms, independent representatives and independent partnerships
|Section 29 This link will open in a new window
|Sections: 193, 194, 195 This link will open in a new window
Definitions of terms relating to professional liability insurance
The insurer covers the liability of the legal or natural person registered with the AMF (the “insured”). Should not be confused with the insurance broker that issues the policy on behalf of the insurer.
|Professional liability insurance contract
Contract under which an insurer undertakes, in exchange for a premium, to cover the liability of the insureds in the event of a claim. The policy is the document that attests to the existence of the insurance contract and contains all of the clauses specific to the contract.
|Professional liability insurance certificate
Document issued by the insurer that certifies the existence of a contract covering the liability and summarizing the coverage under the policy. It is the equivalent of the certificate of insurance that you receive with your automobile insurance policy. Some insurers call this an “insurance card.”
|Insurance policy endorsement
Amendment to an insurance contract to add coverage or adjust clauses. For example, an endorsement could be used to align an insurance contract with Québec regulatory requirements.
|Representative attached to a firm as an employee
Revenu Québec considers a person to be an employee if, under a written or verbal contract, he undertakes to do work for remuneration under the direction or control of a firm.
|Representative attached to a firm without being an employeeNOTE
Revenu Québec considers a person to be a self-employed worker if he is free to choose the means of carrying out a contract and no relationship of subordination exists between the worker and the firm. He can act on behalf of one or more firms, an independent partnership, a mutual fund dealer or a scholarship plan dealer.
Representatives attached to, but not employed by, a firm are not automatically covered by the firm's liability insurance contract. The firm these representatives act on behalf of must ask them to purchase professional liability insurance contracts similar to the one for independent representatives (See the Regulation respecting the pursuit of activities as a representative This link will open in a new window).
However, some insurance contracts purchased by firms may include additional clauses allowing for the coverage of such representatives. This type of contract must be reviewed carefully to ensure that the representatives are covered for all sectors in which they are legally authorized to act and the amounts prescribed by the Regulation respecting firms, independent representatives and independent partnership This link will open in a new windows.
FOR REPRESENTATIVES ATTACHED TO TWO OR MORE FIRMS – The firms the representative is attached to will have to demonstrate that the representative is adequately covered for all his or her activities, regardless of the number of firms he or she is attached to.
Documentation and tools
Professional Liability Insurance Policy Self-Assessment Grid (pdf - 260 KB)This link will open in a new windowUpdated on May 24, 2023You can use this self-assessment grid as a firm, independent partnership or independent representative to ensure that your professional liability insurance policy meets the criteria of the Autorité des marchés financiers (the “AMF”).