What is Accountant Liability Insurance?
As an Accountant, you spend a lot of time on financial regulations, calculating, quantifying and analyzing, but you probably don’t spend much time thinking about Accountant Liability insurance.
Your work days are filled with estate planning, budgets, tax law, financial statements, and regulations. With all these responsibilities, the more practical aspects of running your accounting firm may take a back seat and accountant liability insurance may slip your mind completely.
Now is the best time to make sure you are protected from business risks that come from being an Accountant. It doesn’t where you are in your career path, whether you’re just starting out or nearing retirement, protecting your business from potential accidents and lawsuits is essential.
As a professional Accountant, you are open to many risks. One mistake, miscalculation or omission can turn into an expensive and time-consuming lawsuit. Your risk must be managed to ensure the success and longevity of your business.
BizInsure can help make sure you get the right insurance at the best price, so you can have peace of mind knowing your business is protected.
Read on to learn more about Accountant Liability insurance, why you need it and how it can help you maintain and protect your accounting business for many tax years to come!
What is Accountant Liability Insurance?
Accountant Liability insurance is designed to help protect accounting professionals from business risk. Specifically, the coverage protects you and your firm from financial losses resulting from claims of negligence, errors, or omissions while you are performing your professional duties.
It is a critical layer of protection for professionals in today’s world.
Why Accountant Liability Insurance?
Operating as an accounting professional, you face business risks every day. While accuracy and integrity are the cornerstones of your practice, mistakes can happen and misunderstandings between you and your clients can escalate into lawsuits.
Whether you are a Certified Public Accountant, Bookkeeper or a Certified Tax Preparer, you have exposures to a variety of risks. You are vulnerable to claims of mismanagement as client expectations become increasingly high in our complicated economy.
Also consider the cost to defend a lawsuit, which can be devastating to a business owner, and the case for having Accountant Liability insurance becomes crystal clear.
There are Professional Risks
As an accounting professional you face risks just by doing your job. Perceived wrongdoing is the impetus for claims and lawsuits. It is possible to find yourself at the center of a lawsuit or negligence claim without having done anything wrong.
Claims, lawsuits, and allegations of improper work are costly to defend. Part of being a professional is making sure you are protected from this risk. Accounting Liability insurance does that job for you.
Some examples of exposures accounting professionals face include:
- Errors or omissions that lead to financial loss for clients
- Negligence – the failure to use reasonable care leading to damages or injury
- A breach of duty
- Claims your services or work are not up to standard
We Live in a Litigious Culture
In today’s modern world, lawsuits are commonplace. When something goes wrong, it’s human nature to look for someone to blame. Often a client who suffers from a financial setback, such as a bankruptcy will look to sue whoever has the deepest pockets.
The world of professional accounting is overrun with claim payments, attorney fees and fees for expert witness testimony. These types of fees and expenses can drive a small accounting firm out of business if they do not have the right type of insurance coverage in place to protect them.
Claims Are on the Rise
If something goes wrong for one of your clients, they are likely to start looking around for somewhere to lay the blame. This is how accounting professionals end up at the center of a liability claim.
Even the top accounting firms in the United States must defend claims of wrongdoing. Despite having best practices for checks and balances, fraud prevention and the highest possible standards for audits, these firms end up defending themselves from claims of wrongdoing more and more frequently.
If these large top accounting firms are busy putting out such fires. What would the impacts be on your accounting business should you find your yourself in the center of a lawsuit?
What Does Accountant Liability Insurance Cover?
Accountant Liability insurance is composed of two major types of liability insurance. A good insurance plan contains Commercial General Liability insurance (CGL) and Professional Liability insurance.
These two coverages protect you from liabilities arising from your premises and day to day operations, as well as from exposures arising from your professional services including claims of misconduct or errors.
General Liability Insurance and Accounting Professionals
General Liability insurance is the most basic type of liability insurance for accounting professionals. Every business needs it. In fact, if you are renting office space, your landlord may require you to have it. It’s like the vanilla ice cream of insurance. It’ s affordable and offers peace of mind protecting your business against claims made by a third-party for bodily injury, property damage, and personal and advertising injury
Commercial General Liability coverage includes:
Bodily Injury Claims
If you are being held responsible for someone’s injuries, bodily injury liability coverage steps in for you. As an Accountant, it’s more common to focus on your Professional Liability, but bodily injury claims are the most common type of claim and can occur on any type of premises at any time.
Take for example, your client is coming in for an accounting review consultation. As she is making her way into the office, she trips over a curb in your parking lot, breaks her ankle and requires emergency attention. This has never happened before, but she is claiming you are responsible for her emergency medical bills and lost wages.
Claims of Property Damage
Property damage liability insurance protects you from claims or lawsuits that find you responsible for damaging someone’s property.
For example, a pothole has opened in your parking lot, one of your clients drives over it and damages her tire and rim. She is claiming you are responsible since the pothole was in your parking lot and she wants you to pay to repair her car.
Personal and Advertising Injury Claims
This part of Accountant Liability insurance protects you if someone alleges you have libeled, slandered or infringed on their copyright.
Professional Liability Insurance for Accountants: The Heart of Accountant Insurance Coverage
Professional Liability insurance is the coverage you need to protect you from claims and lawsuits arising out of your actual professional duties and advice.
Remember that General Liability insurance protects your firm from “general claims” of bodily injury or property damage. General Liability will exclude coverage for claims arising from your professional work. For that, you must have Professional Liability insurance.
Defense Costs Coverage for Professional Accountants
If you or your firm end up named in a lawsuit, you must be defended. A defense is necessary even when you haven’t done anything wrong. This is where defense costs coverage comes in as part of Professional Liability insurance.
The cost to defend a lawsuit can put many small accounting firms right out of business. It’s a huge drain on larger practices as well. Defense Cost coverage protects you from the financial risk of a suit.
Libel or Slander Protection (General Liability)
Accountant Liability insurance also provides coverage for claims of libel or slander. A libel or slander claim can arise if a client, other firm or business partner claims they have suffered financially from something you said or wrote about them.
For example, say you use a client’s case to highlight your services. You write about the difficulty the client was having managing their bookkeeping and tax accounting and how your services have helped their business stay in compliance and avoid penalties and fees.
The problem is the client feels like you wrote things that weren’t true and portrayed their business in a negative light. They are claiming you libeled them and are demanding payment for lost business.
Other Benefits of Accountant Liability Insurance
Accountant Liability insurance means peace of mind for your business. While most Accountants pay meticulous attention to detail, mistakes can happen, and things can be overlooked. When this happens, it’s important you have Accountant Liability insurance to protect you.
Affordable Protection for Accountants
Accountant Liability cost is low when compared to the complete protection the insurance offers. It is one of the most affordable insurance coverages available to today’s professionals.
Keeps You in Business
If you stay in the accounting and financial services world long enough, a claim is likely to arise. A client may claim you provided incorrect or improper tax advice. You may accidentally omit a source of income while planning a client’s estate. Mistakes happen to all professionals. That’s what insurance is for.
Get Accountant Liability Insurance Today
All professions come with risk. Accounting professionals face risks every day. There can be accidents at the office, misunderstandings, mistakes or omissions in advice or counsel.
Don’t let worrying about these risks take up your time. Accountant Liability insurance is there to protect you when something goes wrong.
You can click here to purchase coverage quickly and easily.