What Is Professional Liability Insurance for Accountants?
Professional liability insurance, also called errors and omissions (E&O) insurance or malpractice insurance, is designed to protect accounting professionals against claims or lawsuits alleging financial loss due to a service you provided, negligence, misconduct, or failure to deliver services as promised.
In many provinces, all accountants are required to have insurance. For instance, members of the Chartered Professional Accountants of Ontario are required to carry a minimum of $1 million worth of insurance coverage (for one accountant), $1.5 million (for two or three accountants), and $2 million (for four or more accountants). This requirement applies whether you’re running a business alone, in a partnership, through a professional corporation, or providing accounting services to the public in the province.
Most professional liability insurance policies for accountants are ‘claims-made’, which provides coverage for an incident filed during the policy period, and is supported by a six-year discovery policy, that covers accountants for six years after they stop practising.
What Other Kinds of Insurance Do Accountants Need?
It’s worth noting that accountants may also require commercial general liability (CGL) and commercial property insurance as part of their overall policies.
CGL, frequently called slip-and-fall insurance, provides financial coverage for claims of third-party bodily injury and property damage resulting from negligence or unexpected accidents. Commercial property insurance is necessary if you own or rent an office space. It includes contents coverage for your computing systems, office equipment, and furnishings if damaged by fire, water, or are stolen.
Avoiding the Pitfalls of Financial Management
Accounting is the language of business and is not unlike engineering in that you need a margin of safety.
Protect yourself and your finances from lawsuits and costly mistakes and give your clients confidence by getting an accountant insurance policy. Fill out an application to get a free insurance quote. Let our licensed brokers shop our partner network of more than 50 insurance companies to get you the customized policy you need to advance your career and protect your assets.