Accountants Professional Liability Insurance Explained

Accountants professional liability insurance is a must-have for any accounting firm or individual. It protects against claims of professional negligence, errors, and omissions.

This type of insurance is often referred to as errors and omissions insurance, or E&O insurance for short.

The cost of accountants professional liability insurance can vary depending on factors such as the size of the firm, the number of employees, and the level of experience.

Typically, the cost ranges from $500 to $5,000 per year, depending on the specific circumstances.

Accountants professional liability insurance is a type of insurance that provides protection against professional errors made while performing your duties as an accountant.

A good policy will cover errors and omissions, which can include mistakes made while preparing financial statements or tax returns.

It also covers acts of perceived professional negligence, breach of duty and contract, misleading information, bad advice, and any other issues with your performance as a professional accountant.

If a professional liability claim is filed, your insurance will cover all of your defense costs and potential rewards or settlements you might end up having to or choosing to pay.

This type of insurance is essential for accountants to protect their business and reputation from financial damage caused by client claims.

Professional liability insurance for accountants is designed to protect against claims of negligence or mistakes that cause financial harm.

Our policies offer coverage against claims of negligence or mistakes that cause financial harm to another person or company, such as negligence, misrepresentation, and inaccurate advice. It also covers both the obligation to pay damages for covered claims, as well as the cost to defend against such claims.

The coverage is available for various aspects of an accountant's business, including audits, bookkeeping, compilations, consulting services, information technology services, management advisory services, payroll, personal financial planning, and tax planning & preparation.

You can expect coverage for these services at competitive rates.

Some key features of professional liability insurance for accountants include full prior acts coverage, duty to defend policy language, and a broad definition of professional services.

Additionally, the insurance is available for individuals and/or firms, with limits of liability ranging from $100,000 to $5 million.

The policy also includes supplementary payments for various expenses, such as attendance at trial, disciplinary proceedings, and subpoena expenses.

Here are some of the key features and coverage options available:

Any provider of professional financial services is at risk of being hit with a claim eventually, regardless of the quality of their service or experience.

Professional liability insurance is a priority for accountants, as even a part-time accountant working from home can be sued by an agitated client at any time.

Accountant-client relationships are delicate and can sour quickly due to simple miscommunications, misconceptions, or a lack of communication.

Jailed Trump associate Michael Cohen filed a $500,000 negligence lawsuit against his accountant for allegedly making errors on three years of tax returns. This highlights the potential financial consequences of a claim.

Accounting firm KPMG faced a damages claim over an accounting scandal related to KPMG’s audit of a client’s 2013 accounts, further emphasizing the importance of professional liability insurance.

In today's increasingly litigious environment, it's incredibly easy for a client to file suit against you, regardless of your experience or the quality of your service.

Professional liability claims can arise from simple miscommunications, misconceptions, or even a lack of communication, which can quickly sour an accountant-client relationship.

Any client relationship centered around money can take a turn for the worse very quickly, making it essential to prioritize insurance for accountants in any capacity.

A client's dissatisfaction can lead to grievances, and even part-time accountants working from home offices are at risk of being sued by an agitated client.

The risk of a professional liability claim is not limited to full-time accountants; any accountant, including those working part-time or from home, is vulnerable to being sued by a client.

You might be wondering if accounting mistakes can really cost you a pretty penny. Michael Cohen's $500,000 negligence lawsuit against his accountant for allegedly messing up three years of tax returns is a sobering reminder of the risks involved.

A damages claim against KPMG for an accounting scandal related to their audit of a client's 2013 accounts shows that even big accounting firms can get it wrong.

Accounting mistakes can have serious consequences, as seen in Michael Cohen's lawsuit. The stakes are high, and it's essential to choose a reliable accountant to avoid similar issues.

KPMG's involvement in an accounting scandal highlights the importance of due diligence when selecting an accounting firm.

As a professional accountant, you're not immune to the risks of being sued by a client. Any and all providers of professional financial services should be interested in purchasing professional liability insurance.

The reality is, it's incredibly easy for a client, investor, or partner to file suit against you, regardless of the quality of your service. This is especially true in today's increasingly litigious environment.

Even part-time accountants working from home offices are at risk of being sued by an agitated client at any time. This makes insurance a priority for anyone working as a professional accountant in any capacity.

Accountant-client relationships are very delicate, and any relationship centered around money can quickly turn sour.

The cost of accountant professional liability insurance can be a significant expense for accounting firms.

A CPA will generally pay more for insurance than a bookkeeper, as CPAs are certified professionals with higher client expectations and professional standards.

The services your firm provides are a major factor in determining insurance costs. If you're hired by large corporations for audits and tax handling, you'll pay more than a firm doing bookkeeping for private citizens.

Your firm's size and the number of accountants to be covered also impact insurance costs. The larger your firm, the more you'll pay.

A history of liability claims filed against your firm will increase your insurance costs. If you've had severe claims, you'll pay more than a firm with a clean claims history.

If your firm has a history of claims, you'll likely pay more than a firm of the same size and profile that hasn't had many claims.