Accountants professional liability insurance is an insurance product that protects accountants in the event of a professional liability issue like an error or a negligent act. The insurance can provide assistance with a court case, in the event an accountant is taken to court. It also pays out settlements, whether negotiated to keep the case out of court or ordered in a professional liability suit. Some insurance companies specialize in this product and others offer it as part of their family of services.
Like other forms of professional liability insurance, this insurance can protect an accountant from financial harm in the event of a problem with an accounting practice. The insurance can cover a wide variety of issues, including problems with employees and malpractice. It is tailored to the practice size and may include everything from a solo accountant working out of a home office to a large accounting firm with serious liability exposure. While this insurance is not required for accountants, it can be a very good thing for them to have.
Without accountants professional liability insurance, an accountant who runs into trouble will have to pay legal fees and settlements out of pocket. This could be financially devastating in a large or serious case. The accountant also lacks access to the resources available to an insurance company. Insurance companies like to minimize their payouts and thus provide tools like legal advice, referrals to legal services, and so forth to their clients when a liability matter arises.
The price for accountants professional liability insurance depends on the type of coverage offered. It may be helpful to get quotes from several providers to get an idea of the going rate and the types of clauses available in an insurance contract. Accountants should review offers carefully to determine what is covered and excluded, and when the insurance would take effect. Exclusions can be extensive on some policies, and while they make the policy cheaper, they also expose the accountant to greater risks.
Accountants working in an office may want to ask about the type of accountants professional liability insurance their employers carry. The insurance policy may not provide the level of coverage an accountant wants or needs. In this situation, it could be necessary to purchase a rider or supplemental insurance policy to fill the coverage gap and protect the accountant. Without this coverage, an accountant might be on the hook in a liability suit, and the employer may be unable to provide very much assistance.