Does an Accountant Need Insurance?

Your professional body may also set other PII requirements, for example your policy may need to cover particular types of claims.

16. Sole-practitioner economics: why small does not mean cheap

Looking for more information on our professional indemnity insurance cover – or on our other fantastic membership benefits? If you’re not sure which ICPA membership package is right for you, we’re here to help. Drop us a line for personalised advice or a customised quote – we look forward to welcoming you on board! As an accountant, your clients rely on you to protect their financial future. Getting the right insurance in place can safeguard you if things go wrong.

Pro Members – £300k Cover

For self-employed accountants, professional indemnity insurance (PII) is the place to start when bet betting promotions sign up it comes to buying your business insurance. Accountancy professional bodies - including the Association of Chartered Certified Accountants (ACCA) and the Chartered Institute of Management Accountants (CIMA) - require their members to hold a certain level of professional indemnity insurance cover. PII is important for accountants because it’s the cover that can protect you if you’re sued by a client for negligence or a mistake that you make in your work. It can cover you for the following: negligence, making a mistake, or giving bad advice infringing intellectual property rights (for example using an image without permission) For example, you make an error on a client’s tax return and they’re fined by HMRC as a result, or you copy the wrong person into an email and share confidential client information with a third party. In these situations, your PII policy could cover the legal fees and any compensation amount that you’re ordered to pay. Look at the membership guidelines carefully to understand the cover you need, and also bear in mind that you’ll need to provide proof to your professional body that you’ve got the right insurance in place.

Common Risks Covered by PII

Your practice will have a large amount of client data and documentation in its care. Should this data or documentation become damaged or lost, your PII policy will have you covered. A client may make a defamation claim if you say or publish something in your professional capacity that results in their reputation being damaged. Whether intentional or unintentional, the sharing or loss of confidential client data can have significant consequences for their business. PII can cover the cost of compensation payouts and legal fees should this happen, protecting your practice’s finances.

Are PI Expert associated or affiliated with any of the regulatory bodies?

There are plenty of ways in which you can benefit from being a member of the ICPA. Feel free to contact us with any further questions you have about our PII cover – or see our frequently asked questions below: Professional indemnity insurance (PII) is available for all types of professionals, including accountants. It protects you in the rare event that a client files a claim against your business, believing that they have suffered loss or damage as a result of something that your practice has done. They could claim that you have offered negligent advice. They could claim that you have provided negligent services or breached your professional duty.

The cyber impact on PI policies

Professional indemnity insurance will cover you should such a claim occur. When you register for ICPA membership, we’ll send you all the information you need to apply for your PII cover. Be sure to complete the form accurately and in detail so that your insurance is valid, and suits your needs. The cover limit depends on your membership package: £300K for Pro members, £500K for Premium members, and £100K for Essentials members. Our professional indemnity cover is suitable only for those with annual fees up to £250K – and there may be further restrictions depending on the type of work you conduct. There are other business insurance covers that you can add to your business insurance policy. Public liability insurance is a cover that’s important for most businesses, as it covers compensation claims for injury or damage, for example if you visited a client’s office and spilt a cup of tea over their computer equipment.

Read more about public liability insurance here. Employers’ liability insurance is another key business insurance cover, and it’s compulsory for most businesses that have staff. It can cover compensation claims made by a member of staff for illness or injury that they believe has been caused by their work. There are several other covers you may find useful too, including business buildings insurance, business equipment insurance and legal expenses insurance. Jade Wimbledon is a freelance copywriter for Simply Business. Click here to get your self-employed accountant insurance policy, starting with PII and then adding any other business insurance covers you need. Choose from a range of quotes provided by a panel of leading insurers. ACCA and Lockton have put together a range of resources to help members get to grip with the issues around professional indemnity insurance (PII), from finding the right policy to dealing with claims: ACCA and Lockton have put together a range of resources to help members get to grip with the issues around professional indemnity insurance (PII), from finding the right policy to dealing with claims: We're helping members protect themselves and their clients Members will be aware that the threat to businesses from cybersecurity attacks continues to increase, and the expectation is that cyber criminals will seek to attack businesses at predicted peak times of the year, for instance month end, so practitioners need to continue to be vigilant.

• UK employers must have Employers' Liability (EL) insurance with a minimum cover of £5 million.
• The EL certificate must be displayed at each business premises where employees work.
• Insurance must be provided by an authorised insurer under the Financial Services and Markets Act 2000.
• Cover is required for all employees, including temporary, casual, and contracted staff.
• Certain businesses, like family businesses with no direct employees, may be exempt.
• Failure to have EL insurance can result in fines of up to £2,500 per day.

To support members in practice, and to support your clients, we’ve pulled together useful ACCA and partner guidance and resources on cybersecurity.

• When hiring subcontractors, ensure they hold their own EL insurance to avoid liability transferring to you.
• For joint ventures, a project-specific insurance package meeting all parties' minimums is often required.
• When working overseas, local statutory insurance minimums must be met, which can differ significantly.
• For mergers and acquisitions, due diligence must verify all target company insurance meets legal minimums.
• Temporary event insurance must meet local authority requirements for public safety and liability.

We’ve also teamed up with the IASME Consortium to raise awareness of the Cyber Essentials scheme. Since 2020, IASME Consortium has been the National Cyber Security Centre’s Cyber Essentials Partner, responsible for the delivery of the scheme.

• Insurance policies must be reviewed annually to ensure they meet updated legal minimums.
• Notify your insurer immediately if your business activities change to avoid invalidating cover.
• Keep all insurance certificates and policy documents accessible for inspection by authorities.
• Use a broker specializing in your industry to navigate complex minimum requirement landscapes.

Cyber Essentials is an effective government-backed scheme which focuses on the five technical controls designed to guard against the most common internet-based cyber security threats. It allows organisations of all sizes to demonstrate their commitment to cyber security and is now widely considered the minimum level of cyber security for businesses. In the latest article, Duncan Sutcliffe writes about the importance of cyber insurance for accountants. Duncan knows a thing or two about cyber insurance: his company, Sutcliffe and Co Insurance Brokers, has been insuring companies against the eventuality of a cyber attack for over a decade. Sutcliffe and Co are also behind the £25,000 worth of cyber insurance included with Cyber Essentials. Will my professional indemnity insurance cover data breaches? Professional indemnity insurance is designed to cover you for errors, omissions and negligence in your professional service.

12. Audit-specific PI considerations

Remember that even if your client’s claim against you isn’t successful, you’re still likely to incur legal fees. Most insurers offer between £50,000 and £5m of professional indemnity cover. You need to check the level that’s required by your professional body. Minimum cover levels are sometimes calculated according to a firm’s income. However, it’s important to keep in mind that this is only a minimum: You may decide to take out more insurance so that you’re fully covered for any claims. For an accountant, that might be if you forgot to send a client's tax return in on time or you filled it out incompletely; it might be that you failed to advise a client about the best way to organise their business shares. Some professional indemnity, as part of the errors, omissions and negligence, includes some cover for third party loss of data, which means it would cover mistakes which involved losing customer data or sending data to the wrong person.

Table of contents

Yes, Professional Indemnity Insurance for accountants can cover your practice for claims relating to work you have carried out in the past. We offer fully ICAEW-compliant insurance thanks to our partnership with AXA – an A-rated insurer. Requirements will vary from organisation to organisation. However, most industry associations will require at least a minimum level of cover to protect you against any client allegations of wrongdoing. The cost of professional indemnity insurance for accountants will vary depending on the insurer you choose, the level of cover required, and your practice’s risk level.

Financial Protection and Client Confidence

However, premiums can start from as low as £5 per month. To fully protect your practice against anything that could go wrong, additional types of cover you should consider include employers’ liability insurance, public liability insurance, office & business equipment insurance, cyber insurance, and directors’ & officers’ insurance. For accountancy practices, a minimum of £5 million of employers’ liability insurance is required if you employ staff – even if employed on a casual or part-time basis. Public liability insurance for accountants provides cover for any property damage or injuries caused by your business activities. The AAT requires insurance on an “any one claim” basis, including civil liability cover.

12.2 Liability Limitation Agreements (LLAs)

Limits depend on the practice’s gross fee income. ACCA insurance requirements are based on your practice’s annual fee income. They have specific formulae to calculate the minimum level of cover required. CIMA Members in Practice must hold professional indemnity insurance for accountants. However, CIMA does not specify the exact level of cover that is required. This third-party cover is likely to be very limited and it is usually necessary to have the additional cover of cyber insurance which is far more comprehensive when it comes to a data incident and includes both third and the first party cover. In recent years, insurers have been told by the regulator to make it clear whether cyber is or is not covered in policies. If it is covered, it has to be made very clear what it is restricted to, and in many cases, insurers are explicitly saying that there is no cyber cover.