Professional Liability Insurance (PLI) Requirements

Professional Accounting Firms

All registered professional accounting firms (PAFs) and professional service providers (PSPs) are required to have professional liability insurance (PLI) – regardless of whether the PAF or PSP has clients.

The following are the minimum PLI requirements for all PAFs and PSPs, with the exception of limited liability partnerships (LLPs):

  1. $1,000,000 per incident excluding defense costs where one registrant is engaged in the practice;
  2. $1,500,000 per incident excluding defense costs where two or three registrants are engaged in the practice; and
  3. $2,000,000 per incident excluding defense costs where four or more registrants are engaged in the practice.

The term “registrant” refers to an Alberta CPA, candidate or professional corporation.

Limited Liability Partnerships

For those PAFs that are also limited liability partnerships (LLPs), the PLI requirements are as follows:

  1. $2,000,000 per incident for partnerships with fewer than 4 chartered professional accountants or professional corporations engaged in the partnership’s practice, and
  2. $2,500,000 per incident for partnerships with 4 or more chartered professional accountants or professional corporations engaged in the partnership’s practice.

The term “engaged in the partnership’s practice” refers to any partner of the LLP.

Continuing PLI Requirements after Closure/Sale of Practice

Most professional liability insurance (PLI) policies are written on a 'claims-made' basis. This means the insurance policy only provides coverage for claims made while the insurance is in force. If a claim is made after a policy lapses (despite having PLI in place when the work was performed), insurance coverage is not provided.

Accordingly, CPA Bylaw 802 mandates that every designated member of a PAF that closes a practice must ensure that the PAF, or its successor, carries professional liability insurance for at least six (6) years in an amount no less than $1,000,000 per incident. This is to ensure that the PLI will cover professional services provided prior to conclusion of the practice by that PAF and its employees.  

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