If you are a professional engaged in the practice of public accounting or providing financial services in Canada, business insurance is not a nice-to-have, it’s a must-have. Regardless of your accounting firm’s size, carrying the proper Accountant Insurance coverage is vital for success. In this article, we highlight the importance of having Professional Liability Insurance (PLI) and you’ll also learn what other types of insurance you may want to consider to best cover your business.
Who is a financial service provider?
As an accountant or financial service provider, you work hard to help your clients define, rectify, and limit their financial risks. You are considered a financial service provider if you are a:
- Chartered accountant
- Certified general accountant
- Chartered professional accountant
- Bookkeeper
- Tax preparer
What is Accountant Insurance?
Accountant insurance refers to a type of policy designed to protect accountants and accounting companies from financial loss due to various liabilities or unforeseen events. A comprehensive protection package should cover the specific risks involved with providing accounting services, such as:
- Auditing and reviewing engagements
- Computing, filing, and planning tax
- Financial planning and consulting
Accounting insurance coverage tends to extend to malpractice, negligence, and errors.
What does Accountant Insurance cover?
If you are providing accounting services to the public, you must carry professional liability insurance, as per the regulations defined by the Chartered Professional Accountants of Canada (CPA Canada). However, other policies are needed to ensure the complete protection of your business. Therefore, a typical comprehensive accountant insurance package tends to include some, if not all, of the following policies:
Accountant Professional Liability Insurance
According to the CPA Ontario’s by-law, accountant Professional Liability Insurance (PLI) is a requirement for all individuals and firms providing accounting services to the public. Also known as Errors & Omissions insurance, it is imperative because no matter how conscientious you are, mistakes can occur. Should this happen, you may need to defend yourself or your business form lawsuits filed by clients, your client’s business partners, mortgage companies, lenders, shareholders, as well as others. All public accounting service providers nationwide must carry Professional Liability Insurance.
What does PLI cover?
If you find yourself being taken to court over an error or omission, PLI will step in. Liability insurance will cover legal/settlement fees for the following situations:
- Negligence and perceived negligence
- Errors and perceived errors
- Misrepresentation
- Inaccurate advice
- Failing to follow industry standards or updated regulations
Other key types of Accountant Insurance coverage
There are numerous types of insurance for businesses. Some of the most common are:
- Professional liability insurance
- General Liability insurance
- Contents insurance
- Cybers Liability insurance
- Business Interruption Coverage
The culmination of these coverages prevents major losses when a lawsuit threatens your company or if you find your business belongings. This includes equipment or furniture, lost, stolen, damaged, or destroyed items.
Possible risks for accountants
When determining how much insurance will cost for your accounting business, it is important to take into account the level of risk you carry. The greater the risk, the higher your premiums will be. Accounting would be considered a moderate risk company. Accountants, retailers, web developers, media companies, and IT companies carry a higher level of risk than other businesses, such as consulting. Some of the risk factors that your accounting business may need to contend with are:
- Data breaches
- Professional errors
- Employees
- Renting
- High risk tenants
How much does accountant insurance cost?
The cost of professional liability insurance for accountants will vary based on several factors. Generally, accountants can anticipate premiums starting at $700 per year with a $1M limit. If you are an accountant who only offers bookkeeping services can expect to pay less, with premiums starting from $300 per year. According to cpaontario.ca, the minimum amounts of professional liability insurance apply to all firms engaged in the practice of public accounting or providing accounting services to the public.
The required minimum limits are as follows, per claim:
- $1 million for a firm of one member
- $1.5 million for a firm of two or three members
- $2 million for a firm of four or more members
When helping you decide how much coverage you will need for your business, our isure representatives with take into account all the individual nuances of your business. Our brokers will take the following factors into consideration to determine the best policy options for you:
- Training and Experience
- Annual and Projected Revenue
- Services Provided
- Location
As with any other type of business, accountants and financial advisors must take great care to ensure that they have insurance coverage that is tailored to their specific needs. At isure, we can assist you to weigh your level of risk to determine the most comprehensive coverage package. Protect yourself and your business! Call us today to go over your Accountant Insurance needs.
