Given the complex nature of tax laws and accounting & corporate practices in all nations today, professional indemnity insurance for accounting professionals is gradually becoming a must. Keeping this requirement in mind, several insurance firms have formulated cutting edge professional indemnity insurance cover for accounting professionals and financial planning firms. In fact if one peruses any of the companies' lists of claims that are covered by accounting insurance coverage, one realizes that there are a vast variety of claims that the accounting profession needs a buffer against.
For instance a business makes a sizable investment based on the balance sheet made by an accountant or his firm, only to find further down the line that the figures are erroneous. The disgruntled businessman who sees his money lost is quite capable of filing for damages from the accountancy firm, his claim being that it was based on their balance sheet that he took the decision to invest. The accountant is then considered liable according to his professional actions. It is in such a probable scenario that professional indemnity insurance kicks in for the beleaguered accountant. One must always keep in mind that a professional liability lawsuit just does not involve staggering legal costs; it also damages reputations and credibility, sometimes irrevocably.
With the professional indemnity cover in his insurance portfolio the accounting professional knows that the risks of his profession have been factored in. He knows that his claims will be dealt with competently and promptly, keeping his best interests in mind. Broad coverage is beneficial to the accounting professional today. The areas which his policy should cover are legal fees and claim costs, loss of documents, fraud and dishonesty, cost of official inquiries, previous business, outgoing principals and sometimes even vicarious liabilities which covers advice provided by other professionals to referred clients.
All of this is covered under the broad spectrum of errors, omissions and malpractices. These insurance policies are available to firms of all sizes, from solo owner proprietorship firms to large partnership practices. In fact some companies even offer a 'Disabled Partner Replacement Coverage'. All these precautionary moves might seem like over the top to a layman, but for a professional who has invested a quarter of his life qualifying himself and another decade or more to establish his business, its money well spent. Risk management is essential.
In fact there are insurance firms that not only provide professional indemnity insurance to accounting professionals but also a number of adding on services that add value to their product providing for a more satisfied customer. Ranging from free legal counsel from qualified experts offering pre claim assistance, advice relating to issues about accounting practices and procedures, to document review and engagement letter wording. It is a comprehensive and all inclusive package, and any accounting professional will be smart enough to recognize a safety package that encapsulates all his risks, manages them and protects him.