What is Accountant Insurance?
Certified Public Accountants (CPA), auditors, bookkeepers, and tax preparers play a vital role in managing the finances of businesses and individuals. A tax filing error or incoherent financial records can leave your business prone to lawsuits and financial burdens. Damage to your office building and lost records may also cause you to close your practice. Accounting can be considered a low-risk business considering the property and public liability risks, although the professional liability risks may weigh your small business down. Accountants across the country face similar issues while running their business.
A typical insurance program for Accountants include Business Owners or Package Policy, Professional Liability, Workers’ Compensation and Cyber policies. These are the basic coverage types recommended to protect your employees and the business from loss. A BOP or Package policy will include the General Liability and Property coverage for owned buildings and business property and the option to include employee dishonesty and business interruption and extra expense.
Accountants and auditors face several risks and challenges while working as individual entities or with a team.
- Scenario 1 - Your home office burned down by fire. All the important documents are gone, your computer is also a total loss. The clients hold you responsible for the hard copy and electronic documents they had submitted to you and want them recovered. There will be time and money spent recreating those documents. The BOP typically includes coverage for valuable papers and reconstruction expenses.
- Scenario 2 - Your employee made a mistake in filing tax returns for a multinational company that has been a long-term client. The client sues your accounting firm for professional negligence and substantial financial loss.
- Scenario 3 - A client visiting your office comes in and slips and falls on a wet floor, breaking his hip and is unable to work or travel for business. He sues your firm for negligence, medical costs, and lost income.
Business Owners Policy (BOP)
Professional Liability Insurance
In a world where anybody can sue anybody, it is necessary to be prepared in case of an error or omission occurring in your business. Most professions requiring a license need this insurance to protect their business and employees for mistakes that cause your clients' financial loss. While general liability protects for bodily injury & property damage, think of your professional liability as protection for financial losses suffered by your clients resulting from errors or omissions in your work process. When you work so hard to provide high-quality services and financial advice to your client's, even minute mistakes may harm the reputation of your firm. Fast and decisive handling of Professional Liability claims is what you need to have if you hope to save your reputation and client base.
Workers’ Compensation Insurance
Workers’ Compensation and Employers Liability provides coverage for your employees while working, in the accountant’s office or out meeting with clients. Most states require business owners have a worker’s compensation policy (depending on the number of employees) that covers employees’ injuries, pays medical expenses for injuies suffered on the job, a percentage of lost wages (typically 66 2/3%), and death benefits statutorily required in your state. The Employers Liability portion of the policy will pay legal costs to defend your business and judgments awarded in the event your employee sues your business for negligence.
This policy is necessary for auditing and accounting businesses as these types of businesses deal with a huge amount of client personal and financial data. Data breach, cyber extortion, ransomware attacks, fraudulent bank transfers, client notificationand credit monitoring expenses as well as public relations and crisis management expense can all be included in a broad form Cyber Insurance policy. Do not operate your business without this valuable coverage.
Valuable Papers Coverage
This type of coverage helps you reproduce, restore, or replace records if they are damaged by a covered event. Records can be hard copy or kept electronically. Coverage includes extra expense incurred from additional manpower hours or costs incurred to replace lost records.
All businesses face different types of risk based on operations that are inherent in the industry and also individual business risk factors.
All professionals in the financial and accounting industry benefit from these types of coverage. Some of the professions that Accountants Insurance is vital for are as follows:
- Certified Public Accountants
- Tax Preparers