Alleged negligence excluded from errors and omissions coverage due to retroactive date exclusion

Coverage denied under an errors and omissions policy with a retroactive date exclusion which was clear and unambiguous. Claim seeking coverage was dismissed as the alleged acts at issue occurred prior to the retroactive date.

Insurance law – Errors and omissions policy – Exclusions – Agents and brokers – Duties and liabilities of agent – Failure to obtain reasonable coverage – Practice – Summary judgments, availability.

Puri Professional Corp. v. Lloyd’s Underwriters, [2024] O.J. No. 5893, Ontario Superior Court of Justice, December 16, 2024, L.P. Merritt J.

The insured accountant brought an action seeking coverage under an errors and omissions insurance policy. The insurer filed a summary judgment motion to dismiss the claim.

The insured provided tax services and advice to a client in 2014 and 2015. The client overcontributed to his TFSAs in the 2015 and 2016 tax years. The CRA gave notices of assessment for overcontributions in 2018, and the insured assisted the client with objecting to the notices in 2019. In May 2020, the client gave notice to the insured of a potential claim regarding the advice and services given from 2014 to 2019. The insured had an insurance policy for the period from April 9, 2020 to April 9, 2021, The policy was for “claims made” within the policy period, subject to any exclusions. The policy contained a retroactive date exclusion of coverage for any alleged wrongful act committed prior to the retroactive date of April 9, 2020.  The insured notified the insurer of the potential claim in June 2020. In December 2020, the client commenced an action against the insured. The insurer denied coverage.

The Court interpreted the retroactive date exclusion narrowly and found that the exclusion was clear and unambiguous as it referred to a specific date. The alleged negligent acts occurred well before the retroactive date. The Court granted the insurer’s motion for summary judgment to dismiss the claim.

This case was digested by Mark A. McPhee and edited by Steven W. Abramson of Harper Grey LLP and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter.  If you would like to discuss this case further, please feel free to contact them directly at [email protected] or [email protected].