Accountants play an important role in helping individuals and businesses manage their finances. As an Accountant, you work with important, private and sensitive information about your personal and commercial clients.
Making an error in your duties or neglecting to provide a needed service for one of your clients has great consequences. One mistake or oversight can cost you and your clients significant sums of money.
As an accounting firm, you have a substantial professional risk as well as some risk of physical injury or physical property damage from the operation of your business premises.
However, the largest exposure for Accountants comes from professional liability. Making sure you have the proper insurance to protect you from professional liabilities is vital.
Accounting firms assist individuals and businesses with financial record keeping and tax preparations. You may assist your clients with financial filings and statements. You may also prepare and file taxes for your clients.
Accounting Liability Insurance is the perfect coverage for accounting professionals, including those who provide:
- Bookkeeping Services
- Tax Preparation and advice
- Certified Public Accountant services
Is Accountant Liability Insurance the Right Insurance for You?
All businesses need insurance, including Accountants. With every business, there is a risk and the risk must be insured against to maintain a healthy business. As an accounting firm, you have two main exposures – General Liability risk and Professional Liability risk.
As an accounting professional you face risks every day. Mistakes and misunderstandings can occur. Further, lawsuits arise even when there are no errors. The perception of wrongdoing is the basis of claims and lawsuits. One client or attorney that simply thinks you may be responsible for some damages can name you in a suit. The next thing you know, you are at the center of a lawsuit or negligence claim without having done anything wrong.
What is the Cost of Not Having Accountant Liability Insurance
Not having proper Accountant Liability insurance can cost your entire business. Even if the allegations are not true, they must be defended. The cost of a professional defense can put most accountants out of business. Not to mention the damage to reputation. It’s nearly impossible for a professional services business to recover from a lawsuit if they were not properly insured. Personal assets could also be at stake.
How Much Does Accountant Liability Insurance Cost?
Many professionals go without proper Liability insurance because they assume it’s too expensive. Especially new accountants just starting out with their own firms may be looking for every way possible to cut costs.
Don’t skimp on your insurance for two reasons: One, not having proper insurance will cost you much more in the long run – possibly even your business and career. Second, good Accountant Liability insurance is quite affordable.
BizInsure does the shopping for you so you can get the best coverage at the right price. Policies are available starting as low as $45.00 a month. A true bargain considering the protection you are investing in!
What Could Possibly Go Wrong?
In the world of Finance and Accounting, a lot can go wrong. If your client suffers some type of financial loss such as a bankruptcy or foreclosure, they and their creditors are likely to start looking for somewhere to lay the blame.
This is how accounting professionals can end up in the center of a lawsuit without having done anything wrong.
The largest accounting firms in the country have the best systems of checks and balances, fraud prevention and detection policies as well as the highest auditing standards, yet these firms find themselves frequently battling claims of wrongdoing.
That is why Accountant Liability Insurance is critical. It protects you against:
- Errors or omissions leading to financial loss
- The failure to use reasonable care leading to damages or injury (Also known as negligence)
- A breach of duty – perceived or real
- Claims your services or work are not up to standard or even the perception of such
What You Get When You Purchase Accounting Liability Insurance
Protection. Pure and simple. Mistakes and oversights occur in all professions and areas of life. Unfortunately, in the accounting world, an apology and a discount code aren’t enough to make things right.
As an accounting professional, your clients trust you with their financial lives. The stakes are high. The responsibility you have to your clients is important and you have a lot of exposure.
Accountant Liability Insurance protects you from everyday risks you face while operating your business.
Professional Liability Insurance for Accountants: An Affordable and Critical Protection
The main risks for accounting professionals stem from your professional services. You need other liability coverage too, but we’ll discuss that later.
As a financial professional, insurance to protect you from errors, omissions, and lawsuits is of prime importance. So, let’s look at exactly what you are buying when you purchase Professional Liability insurance.
1. Defense costs
Every lawsuit must be defended. One of the best things about Professional Liability insurance is it pays for your defense costs. You get your own legal counsel. No matter if you decide to fight the suit, or you want to pay a settlement, your insurance picks up the bill.
For example, let’s say one of your clients is alleging you made an error in their 2014 tax preparation. The mistake has caused them a costly audit and substantial fees. You review your records and discover you didn’t offer tax preparation service to this client for that tax year. You discuss this with your attorney and decide to fight the lawsuit.
Your Professional Liability policy picks up the defense costs.
2. Settlement Payments
Your Professional Liability insurance responds too if there is a legitimate wrongdoing. Let’s say the same case applied, but when you looked back at your records, you discovered there was an error. You remember the year. You were just starting out and your firm was in full growth mode. It was tax time. You were working day and night to keep up with the workload.
You want to settle this matter with the clients. Your Professional Liability policy steps in to help you pay for legal counsel and prepare a settlement.
These scenarios are unpleasant. They can be stressful, even frightening. But with the proper insurance, they can be managed.
3. Libel or Slander Protection
Accountant Liability insurance also protects you from claims or accusations of libel or slander.
Libel or slander claims may seem far-fetched, but they do happen. For an accounting firm, a libel or slander claim can arise if a client, other firm or business partner, claim they have suffered financially from something you said or wrote about them.
For example, let’s say you received permission to highlight one of your commercial clients on your website. When they came to you, they were unable to manage their bookkeeping and tax accounting. You took over their accounting and now they are thriving. They are compliant and have avoided any penalties and fees regarding their payroll, taxes, and bookkeeping.
You received their permission to publish their story on your website for marketing purposes. They agreed, but after the story was published, the client felt like you portrayed their business in an unfair and negative light. They are claiming libel and want payment for lost business.
Commercial General Liability: Basic and Affordable Coverage
General Liability insurance is a very basic type of Commercial Insurance that every business must have. Whereas Professional Liability protects you from claims or lawsuits arising from your professional services, General Liability coverage protects you from “general” or everyday risks.
This may include slip and fall accidents or damage to someone’s property that occurs at your office.
Commercial General Liability includes:
Bodily Injury Liability
Put simply, Bodily Injury Liability protects you if you’re at fault for someone’s injuries.
Bodily Injury Liability lawsuits are very common. These lawsuits often stem from typical slip and fall accidents. Bodily Injury Liability protects you is someone is injured on your property and they are claiming you are responsible.
If one of your clients comes to your office for a meeting, trips on a rug and injures their leg, they may want you to pay for their medical bills and other costs associated with their injury. That’s’ what Bodily Injury Liability coverage does for you.
Property Damage Liability
Property Damage Liability coverage is also a part of General Liability coverage. It steps in if you are being held responsible for someone’s property damage. It works the same way Bodily Injury liability coverage works, except it pays for property damage, not injury.
Affordable Insurance Coverage to Protect your Accounting Business
There are countless reasons you must have Accountant Liability insurance to protect your business. Mistakes happen, frivolous claims must be defended, and accidents can occur anywhere.
Good Accountant insurance protects your business when mistakes happen. A small investment in good insurance can save your business should something go wrong.
With BizInsure, Accountant Liability insurance is easy and affordable. Answer a few questions and you’re covered!
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