In the province of Ontario, Charter Professional Accountants (CPAs) are required to own a minimum amount of coverage of $1 million (for one accountant practicing), $1.5 million (for two or three accounts practicing) and $2 million (for four or more accountants practicing). This requirement applies whether you’re running a business alone, in a partnership, or through a professional corporation or provide accounting services to the public in Ontario.
There are two types of professional liability insurance policies, ‘occurrence’ and ‘claims-made.’ An occurrence policy covers claims that occurred during the policy period, regardless of when the claim was main. In contrast, a claims-made policy provides coverage for an incident that happened and was filed during the policy period.
For accountants, insurance tends to be claims-made, which is supported by a six-year discovery policy, which covers accountants for six years after they stop practicing.
Why do accountants need professional liability insurance?
No profession is error-proof, and when you provide a service involving other people’s finances, the risk factor multiplies. Here are common claim scenarios accountants may face: