When arranging Accountants Insurance, one of the most important policies you can invest is Accountants Professional Indemnity Insurance, which will protect you in the event of a claim made against the company for negligence or an error/omission in carrying out its professional duties.
Most accounts have Professional Indemnity Insurance, but I’ve been surprised by how many have policies with areas that require attention or have been paying too much for their policy.
So what does Accountants Professional Indemnity Insurance cover?
Here are a few areas that are covered under Accountants Professional Indemnity Insurance:
- Negligence – protects you for errors or omissions that cause your client to suffer a loss
- Libel or slander – protects you against a claim for any inadvertent defamation
- Breach of confidentiality – protects you against inadvertently breaching a third party’s confidentiality
- Dishonesty – protects you against a third party claim arising out of the dishonesty of a partner or employee
- Data Protection Act Costs – pays costs to defend any action brought against you by the Information Commissioner under the Data Protection Act
- Privacy breach costs – privacy breaches are increasing as society becomes more technologically advanced. If you cause a breach of privacy some policies support you by contributing to the costs of mitigating the breach
- Loss of electronic documents – as well as loss of paper documents under your custody
Accountants Professional Indemnity Insurance Claims Examples
Here are some real-life examples of where Accountants have used their Professional Indemnity Insurance:
A failure to lodge tax returns led to the client losing tax repayment and interest. Cost £14,000.
A lender sought reference for a business’s mortgage. The business failed and the subsequent property sale failed to cover the loan. Cost £180,000.
The firm, who acted as accountants to a profitable company, introduced them to a tax mitigation consultancy. The company got involved in a tax mitigation scheme that turned out to be fraudulent from a tax perspective. Cost £130,000.
The firm failed to identify a serious fraud due to poor audit procedures. The cost exceeded their Professional Indemnity limit of indemnity of £1,000,000.
Hopefully some of the above gives you an insight into Accountants Professional Indemnity Insurance and why it is an essential part of Accountants Insurance.
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Accountants Professional Indemnity Insurance