What Are The Different Types Of Insurance Available For Accountants
The very nature of an accountant’s job involves handling the finances and accounts of his clients. Minor mistakes or lapses in judgement might occur anytime and might lead to financial losses for the clients. These situations might affect the accountant’s relation with the client and can also lead to law suits against the accountant.
Facing a law suit involves huge amount of costs that might disturb the financial condition of the accountant and effect their business negatively. Buying a chartered accountant insurance cover or a professional indemnity insurance helps the accountants to cover these costs without any financial stress.Chartered accountants are required to buy minimum cover of PI insurance to get registered with professional bodies and start their business. It is essential for accountants to buy adequate cover to cover all the costs like the lawyers and advisors fee and any charges levied by the court to make the mistake right.
The amount of chartered accountant insurance required by an accountant should be determined keeping the nature of the business in mind. If the accountant deals with taxation and audit, there are high chances of law suits by clients as any tax advice which is considered fraudulent and evasive by the ATO will result in huge penalties for the client, which will result in the client filing a law suit against the accountant. If the accountant deals with payroll and bookkeeping, there is a chance of breach of confidentiality and misuse of data by the employees of the firm, which should be covered by the insurance.
Apart from the chartered accountant insurance, accountants can also opt for the public liability insurance, to cover the costs and legal expenses incurred if there is any damage to the property of the third-parties, buildings and contents insurance to cover any loss to the property due to unforeseen circumstances, directors and officers insurance to cover any legal expenses incurred to fight disqualification as a director and audit shield policy to cover any legal expenses arising out of tax audit for the clients and also recover the price of the man hours spent preparing the required statements and advising the client to face the tax audit.