Professional Indemnity Insurance For Accountants
Secure your accounting practice against unforeseen client claims with essential Professional Indemnity Insurance for Accountants, a cornerstone of financial and reputational protection.
What is Professional Indemnity Insurance?
Professional indemnity insurance (PII) is available for all types of professionals, including accountants. It protects you in the rare event that a client files a claim against your business, believing that they have suffered loss or damage as a result of something that your practice has done.
They could claim that you have offered negligent advice. They could claim that you have provided negligent services or breached your professional duty. Professional indemnity insurance will cover you should such a claim occur.
The Importance of PII for Accountants
Your clients put a great deal of trust in your professional expertise and years of experience. They trust you with their personal information and sensitive financial data – and they pay you for your expert advice.
Most of the time, your client’s work will be plain sailing. However, there’s always the possibility that something could go wrong.
We are all human, after all: it’s always possible that your practice could make errors or unintentional omissions or that you could provide advice that leads to a client’s financial loss. Should they decide to take legal action as a result, the financial burden on your practice could be significant.
Professional indemnity insurance provides you with a safety net. It ensures that you are able to defend your practice against any potential legal claims from clients without footing the full financial cost yourself.
How else can the ICPA help you?
There are plenty of ways in which you can benefit from being a member of the ICPA. Find out more below.
Key Benefits of Professional Indemnity Insurance
There are three key benefits to taking out professional indemnity insurance for your accountancy practice:
- Financial protection. Taking out professional indemnity insurance will cover any legal fees you need to pay any damages awarded against you, safeguarding your financial stability.
- Client confidence. PII sends a clear message to your clients that there is financial backing in the very unlikely event of a mistake. This can enhance their trust in your practice.
- Compliance. Many professional industry bodies and associations – both in the accountancy sector and beyond – request that firms hold adequate PII cover as a regulatory requirement.
Common Risks Covered by PII
Professional indemnity insurance for accountants tends to cover four key areas of risk, namely:
- Negligence. This includes any oversight or mistakes resulting from your firm’s work, such as providing incorrect advice or miscalculations.
- Loss of documents or data. Your practice will have a large amount of client data and documentation in its care. Should this data or documentation become damaged or lost, your PII policy will have you covered.
- Defamation. A client may make a defamation claim if you say or publish something in your professional capacity that results in their reputation being damaged.
- Breach of confidentiality. Whether intentional or unintentional, the sharing or loss of confidential client data can have significant consequences for their business. PII can cover the cost of compensation payouts and legal fees should this happen, protecting your practice’s finances.
Become an ICPA member by signing up today!
On average members save over £1,000 a year with the ICPA
- check_small Access to TolleyLibrary Elements
- check_small £300,000 Professional Indemnity Insurance
- check_small Tax, VAT, Legal, Employment and Health & Safety advice lines
- check_small Exclusive partner discounts
- check_small See below for a full membership breakdown
Choosing the Right Level of Coverage
While it can be tempting to choose a PII policy based on price, you need to ensure that you are getting the right level of coverage for your money. “The right level of cover” will vary from practice to practice and depend on several factors.
The size of your practice will have a part to play, as well as the complexity of the services that you offer. The makeup of your client base and the types of work that you do will also affect the cover level you choose: the higher the potential financial impact of a claim against you, the higher the level of cover you will need.
PII policies, like any other insurance policies, are priced based on potential risk. Risk factors included in pricing calculations include the categories of work your practice undertakes, any claims history, your practice’s fee income and the ratio of partners or directors to staff at your practice.
Once you have chosen a potential policy, be sure to read the documentation carefully. Before you proceed, you’ll want to make sure that every element of cover you need is included and that you have a strong understanding of the policy wording.
FAQs on Professional Indemnity Insurance for Accountants
Yes, Professional Indemnity Insurance for accountants can cover your practice for claims relating to work you have carried out in the past.
Requirements will vary from organisation to organisation. However, most industry associations will require at least a minimum level of cover to protect you against any client allegations of wrongdoing.
The cost of professional indemnity insurance for accountants will vary depending on the insurer you choose, the level of cover required, and your practice’s risk level. However, premiums can start from as low as £5 per month.
To fully protect your practice against anything that could go wrong, additional types of cover you should consider include employers’ liability insurance, public liability insurance, office & business equipment insurance, cyber insurance, and directors’ & officers’ insurance.
For accountancy practices, a minimum of £5 million of employers’ liability insurance is required if you employ staff – even if employed on a casual or part-time basis.
Public liability insurance for accountants provides cover for any property damage or injuries caused by your business activities.
ICPA members can benefit from a quick and easy online quote mechanism. £300k of cover is provided at no additional cost to members, and coverage can also be extended and tailored online.
The AAT requires insurance on an “any one claim” basis, including civil liability cover. Limits depend on the practice’s gross fee income.
ACCA insurance requirements are based on your practice’s annual fee income. They have specific formulae to calculate the minimum level of cover required.
Yes. CIMA Members in Practice must hold professional indemnity insurance for accountants. However, CIMA does not specify the exact level of cover that is required.