Professional liability · Accountants
Professional Liability Insurance for Accountants
A mistake in a return, or a deadline missed, can cost your client money. Professional indemnity insurance can meet the cost of a claim like that, within the terms of each policy.
The subject matter
What kind of claims this concerns.
An accountant’s liability attaches to the services provided: bookkeeping, filings, payroll, advice. An error in any of them has an immediate financial footprint for the client.
How far the cover extends depends on how clearly those services are described in the policy.
The services
What gets declared as an accounting service.
The fuller the description, the fewer the gaps. These are the categories a practice usually declares.
Bookkeeping and ongoing accounting
The day-to-day work, single and double-entry books, reconciliations and year-end close. It underpins every filing, so an error here shows up in everything that follows.
Tax returns and filings
Returns for individuals and companies, VAT, withholding taxes and other periodic submissions. Deadlines here are a material part of the service.
Payroll and employment filings
Payroll calculation, social security contributions and submissions to the relevant authorities. Usually the most frequent filings a practice handles.
Financial statements and reporting
Preparation and filing of financial statements, and reporting to management, banks or investors. The risk here depends on who relies on the report: when that is a bank or an investor, the sums are larger.
Advisory and tax planning
Advice is treated differently from execution. If you give tax or business advice, declare it, so there is no argument later about whether it falls within cover.
Audit and inspection support
Representing and supporting a client through a tax or social-security inspection. It is not automatically included, so it is worth declaring separately.
The nature of the loss
What kind of loss is covered.
In other professions a claim concerns injury or physical damage. In an accounting practice it is almost always an amount: what the client says they bore because of an error.
Precisely because that amount is measurable, cover has its most direct practical value here.
The limits of cover
What a professional indemnity policy does not do.
We say this early, because it is where most of the confusion in this profession starts.
- The client’s own taxTax the client always owed is not a loss. Any loss is the extra cost that followed from the error, not the tax itself.
- Fines and penaltiesAdministrative penalties are excluded as a rule. Some policies address surcharges caused by the professional’s error, a point we check in the wording rather than promise in advance.
- Fraud and deliberate actsCover responds to the unintentional error or omission. Deliberate breach and dishonest conduct are excluded.
To get started
What we need in order to quote.
- Services the practice providesIn detail, including advisory work where it is offered.
- Annual fee income of the practice
- Number of clients and their general profileIndividuals, small businesses or larger groups. The shape of the client base affects what limit makes sense.
- Number of people working in the practice
- Years in operation
- Existing policy and retroactive date, if any
We do not need your clients’ records or files to prepare a proposal.
Common questions
Questions accountants ask.
Are my employees covered?
Under most policies, employees are included when acting within the scope of their duties on behalf of the practice. Contractors who invoice independently are treated differently, so tell us about them.
Do I need cover as a sole practitioner without an office?
The risk follows the services, not the size of the practice. An accountant with a few substantial clients can carry more financial risk than a practice with many small ones. Limits are set on that basis.
What does the retroactive date mean for an accounting practice?
It determines whether claims relating to work done before the policy started can be considered. Because a tax matter can resurface years later, keep that date at every renewal.
Do clients ask for it?
Increasingly, particularly companies with foreign shareholders, businesses subject to statutory audit, and clients with external financing. For them, evidence of cover is a sign that a practice is properly run.
By profession
Professional liability by profession.
- LawyersLitigation and advisory practice.
- EngineersDesign, calculations, specifications, site supervision.
- PharmacistsDispensing, pharmaceutical advice, the pharmacy itself.
The first conversation
Let us look at the cover that fits your practice.
We start with the services you provide and the profile of your client base, and come back with two or three limit options and what each costs.