What Is Accounting Insurance?

1. ACCOUNTING INSURANCE EVERYTHING ACCOUNTANTS NEED TO ALLEVIATE THEIR RISKS!

2. Accountants or accounting firms help their clients to mitigate financial risks.  • However, these professionals also deal with plenty of risks while providing services to their clients. • You need to make sure to analyze all your risks and provide complete coverage so you can provide services without any hindrances.

3. What Kind Of Risks Do Accountants Face? Accountants have to be very careful with their work as their small mistakes can cost their clients millions. Clients might end up suing them for these costly mistakes. Here are other risks that accountants might face: • Claims related to negligence  • Data breach and data leak  • Property damage  • Employee related claims  • Failure to detect financial irregularities

4. Accounting Insurance • Accountant insurance protects independent accountants and accounting firms from all the risks and uncertainties associated with financial industry. • It protects professionals such as: • Independent Accountants • Accounting Firms • Certified Public Accountants (CPAs) • Bookkeepers • Tax Preparers • Enrolled agents

5. What Insurance Policies Do Accountants Need? • Professional Liability Insurance • Commercial General Liability Insurance • Commercial Property Insurance • Commercial Auto Insurance • Business Interruption Insurance • Business Owner's Policy • Cyber Liability Insurance • Worker's Compensation Insurance • Employment Practices Liability Insurance • Fiduciary Liability Insurance • Commercial Umbrella Insurance • Valuable Paper Coverage

6. Professional Liability Insurance • This policy provides coverage for:   • Omissions   • Actual or alleged errors/mistake   • Professional negligence or claims of negligence   • Breach of duty   • It also covers any legal fees, defense costs, and settlements for lawsuits arising from professional mistakes. • For example, an accountant was held liable for misrepresentation of numbers on financial statements of a firm, this policy will cover all the costs resulting from the incident.

7. Commercial General Liability Insurance • It covers your business from damages of third-party claims such as: • Bodily injury • Property damage • Personal injury • For example, this policy will cover your costs like medical expenses and legal fees resulting from a third-party claim in case of a lawsuit. 

8. Commercial Property Insurance • This policy provides coverage to the property owned by the business such as: • The building or office space  • Personal property • Computers • Furniture • Equipment • It also covers these property in the event of fire, vandalism, or other uncertainties.  • For example, an electric short-circuit in your office burned a few furniture. This policy will cover all the losses resulting from the fire.

9. Commercial Auto Insurance • It provides coverage to auto that a business owns for damages in case of an accident.  • The coverage includes property and medical expenses.  • For example, your employee crashes the firm's car while driving to the office, this policy will cover all the losses.

10. Business Interruption Insurance • This policy provides coverage when there is an interruption in the income generating operations in the business.  • For example, a fire at your office forced you to shut your office for a few days. This policy will cover the loss of income that you incurred due to the closure. 

11. Business Owner's Policy • This policy is a combination of commercial general liability, commercial property insurance, and business interruption insurance.  • It includes the following coverages: • Third-party liability coverage  • Property coverage   • Business interruption coverage  • For example, one of your employees mistakenly spills hot coffee on your client. This policy will cover all the losses for you.

12. Cyber Liability Insurance • This policy covers losses from data breaches and cyber-attacks.  • The losses can be in terms of:  • Cost of communication to clients • Data restoration • Legal fees • Third-party damages • This policy is essential for accountants as they usually hold sensitive data like financial statements, credit card numbers, social security numbers, and other information. 

13. Workers Compensation Insurance • This policy provides benefits to employees in case of a work-related injury.  • This policy is mandatory in most states. • Its benefits include:  • Medical bills  • Lost wages  • Funeral costs  • Legal fees

14. Employment Practices Liability Insurance • This policy protects accounting firms from employee-related claims.  • Employee related claims include: • Harassment • Discrimination • Wrongful termination • For example, one of your employees sue your firm for workplace discrimination. This policy will cover your losses from this claim.

15. Fiduciary Liability Insurance • Accountants have a fiduciary duty towards their client as an investment advisor, trustee, attorney, and personal representative of an estate. • This policy will protect you from lawsuits arising from your fiduciary duties. • For example, your advice regarding an investment project turned out to be fatal for your client and thus, he sued for the losses he incurred. Fiduciary liability insurance will keep you covered in this scenario.

16. Commercial Umbrella Insurance • This policy is an extension on coverages of other liability policies. • This policy covers you when the cost of a third-party claim exceeds the limit of other liability policies. • For example, the electric short-circuit event in your office leads to a huge fire that damages the entire building and injures your employees. The loss from this event exceeded the limits of all your liability policies. In this scenario, commercial umbrella insurance will cover the losses resulting from the fire.

17. Additonal Coverages These are the policies that accountants or accounting firms must have to secure themselves.  • They should also consider getting valuable paper coverage for their firms. • This policy will cover the costs resulting from loss of any valuable records or papers such as bank statements, financial documents and tax records. 

18. Cost of Accounting Insurance • The price of accounting insurance is determined by the following factors: • Payroll • Workforce size • Accounting and finance services provided • Revenue • Claims history • Equipment and property