How Much PI Insurance Does an Accountant Need?

These insurers have agreed to meet the requirements of ICAEW's minimum approved policy wording.

• Review policy exclusions for cyber liability and data breaches
• Consider standalone cyber insurance as a supplement to PI
• Fidelity cover (for employee theft) is often a separate policy
• Legal expenses insurance can be a valuable addition
• Policy excess (deductible) should be set at an affordable level
• Ensure the policy territory is worldwide for international clients
• Negotiate a waiver of subrogation for key client contracts

The fact that an insurer is on the list does not imply that ICAEW bet football betting today has performed independent checks on the insurer's suitability.

4 times PI Insurance can prove invaluable for accountants

This exists to protect firms once they cease to trade, by covering their past liabilities in the event of any claims. ACCA requires members to maintain run-off cover for six years once they cease to trade. When it comes to a purchase or sale, how exactly your cover responds will depend on whether you’re the purchaser or the seller. In each case, below are some areas that should be considered, and how best they should be approached. If you are selling your practice, be sure to consider the following: Will you be responsible for maintaining the run-off cover once the sale goes through?

Telegraphic Transfers and Faster Payments

If so, ensure you discuss this with your insurers, and do not carry out any work after the run-off date agreed upon. ACCA requirements are for run-off to be maintained for six years. If you’re not responsible for maintaining run-off, is the purchasing firm going to be responsible for covering your run-off under their policy moving forwards? If so, you will likely need to provide them with your last completed proposal form and claims history. But consider the potential pitfalls of bet betting deals new customer this approach.

Do I need a degree to do ACA or ACCA?

For instance, how will you ensure that the purchasing firm continues to maintain cover for the appropriate period – either to avoid you becoming exposed in the event of a claim, or falling in breach of the ACCA regulations? How will you pay for the run-off cover? Historically, some providers have offered block run-off policies; however, this is no longer available. As a result, budgeting for the premiums can become more complicated. Premium finance options are also often unavailable to firms who have ceased to trade, so you should ensure you have means to pay for the cover for the six-year period. ICAEW recommends that you investigate the current ratings and discuss with your brokers the suitability of these insurers when you take out or renew your insurance. When obtaining PII or renewing existing cover, you should ensure you arrange qualifying insurance and check the following: The insurer is on the list of the current list of participating insurers (and if the insurance is provided by more than one insurer, that all insurers are participating).

• Financial penalty for non-compliance can be up to £5,000
• Suspension of membership is a potential consequence
• ACCA's Professional Standards Department monitors compliance
• Members must notify ACCA of any material change in cover
• Breach of requirement is considered misconduct

The cover meets the minimum limits of indemnity set out in ICAEW’s PII Regulations.

• Trustee appointments often require specific PI insurance verification
• Insolvency practitioners have separate, statutory PI requirements
• Public sector appointments may have different insurance stipulations
• Working overseas may necessitate additional local insurance

The policy provides cover which meets ICAEW’s approved minimum wording and includes at least six years’ retroactive cover (ie, cover for claims arising in relation to advice, services and business activities carried out during the last six years). Please also remember to check that the policy complies with ICAEW's updated requirements that took effect in September 2024.

• Minimum indemnity limit typically £50,000 for members in practice
• Cover must be provided by an insurer authorized in the UK
• Policy must cover civil liability from professional business activities
• Run-off cover required upon retirement or cessation of practice

All participating insurers have agreed to provide cover under terms that match those of ICAEW's approved minimum wording.

Other FAQs

The PII Regulations give details of the amount of insurance required, insurers and the policy wording insurers must use. Qualifying insurance is underwritten in terms of the minimum wording, which is approved by ICAEW. Policies must use this wording or contain a difference in conditions endorsement. ICAEW PII minimum approved policy wording – effective from 1 September 2021 Schedule of amendments to the PII minimum approved policy wording (1 September 2021) Non-members can download an order form to obtain historic copies of ICAEW's minimum approved policy wording. You must obtain the insurance required by the PII regulations from a participating insurer. Many insurers use their own policy wording and, in some instances, this will include extensions of cover beyond the cover that is required under the minimum wording. Participating insurers which use a different policy wording must also include a difference in conditions (DIC) clause in the policy and, as an extra safeguard, in the absence of an express DIC clause, it will be deemed to apply. In the event of a dispute between a policy holder and their insurer, the difference in conditions clause should ensure that ICAEW's minimum wording overrides any provision in the insurer's wording that is less favourable to the insured. All ICAEW compliant policies should include a DIC clause and there is provision in ICAEW’s contract with each insurer for firms to enforce this requirement.

Why Professional Indemnity Insurance Matters for Accountants

In this case, run-off insurers managed all communications with the claimant to relieve the family of further upset and conclude the claim. Each party should also ensure that the other relevant parties have access to historic files. This ensures that, should a claim arise, they will be able to validate the advice given or provide copy documents or communications. For further information, please visit Lockton’s Accountants page, or contact Catherine Davis, ACCA relationship manager: catherine.davis@lockton.com Chloe Sweet, vice president, on chloe.sweet@lockton.com Lockton is ACCA’s recommended broker for professional indemnity insurance. The regulations relating to audit, insolvency, probate, investment business and the eligibility requirements for a practising certificate (PC) all require members and firms to comply with ICAEW's PII Regulations. If you require further information about this, please call +44 (0)1908 248 250 or use our Live Chat service. ICAEW recommends you take necessary steps to ensure there is no gap in insurance cover which would be a breach of the PII Regulations. Firms have a legal obligation to make a fair presentation of the risk on taking out or renewing cover.

About the ACCA

If you are the purchasing firm, factor in the following as part of your considerations: Will you be responsible for covering the past liabilities of the firm you are buying once the bet best betting offers for new customers purchase goes through? If so, this is likely to impact on your premium and the rating approach that your underwriters take. For example, if the firm you are purchasing has a poor claims history, this will impact upon your policy as a whole. Similarly, if you take on the past exposures under your policy and a large claim subsequently arises from work completed by the firm you purchased, this claim will impact your risk profile moving forwards. If you are not responsible for the past exposures but are planning to use the existing trading name of the firm you are purchasing for any period of time, you should ensure this is included within your own policy moving forwards.

Terms of engagement

Your insurers will likely look to apply a retroactive date to the policy for the new firm, which will confirm that no work completed prior to the date in question will be covered. What processes will you need to put in place to review and pick up on any potential problems from past work completed by the purchased firm? If there is an error in past work that is not picked up, and is then replicated in the future, you may find that any claims are split between your insurers and the run-off insurers. Regardless of whether you are the purchaser or the seller, what is important for both parties is for responsibilities to be appropriately understood and agreed upon. Both parties should agree on the date from which responsibility transfers to the purchaser, particularly if completion of work straddles the completion date.

What should I know if I decide to move from my existing PI insurer?

It is sensible to build this into the sale agreement – we are often notified of new claims during the first year of run off, brought to light when a fresh pair of eyes reviews past work. In one case, a client picked up on a template error for payroll calculations which spanned several years, including incorrect holiday pay and pension calculations. This resulted in six claim notifications being made under the run-off policy. In the case of another client, the sole trader had passed away suddenly, resulting in a claimant actively trying to pursue a claim against the insured’s family. As you can imagine, this added immensely to the family’s distress. Therefore, in order to safeguard the indemnity available for a claim should it arise, it is essential that firms are open and transparent with their insurer/prospective insurer when taking out or renewing cover as to: their claims history and any potential claims (or grounds to suspect a claim - ‘circumstances’); In-depth and complete information should be provided at the outset of the renewal process in an effort to make proposals more attractive to insurers, and to assist in obtaining a timely response from insurers as to whether cover terms will be offered.

The duty of fair presentation was introduced by the Insurance Act 2015.

Ready to get a quote?

As you’ve seen, it depends on your individual circumstances. We know how confusing getting the right PI insurance can be, though. We’re here to answer any questions you have and guide you towards the cover that’s right for you. Just give us a call on 0345 222 5391 and we'll be happy to help. In the meantime, remember that budgeting for insurance (at whatever level of cover) is always going to be easier – and cheaper – than budgeting for a disaster.

16.5 Run-off cost for sole practitioners

And that's why we advise you to buy the highest level of cover you can afford. Top tips to ensure you aren’t caught out There are lots of aspects to consider when you’re thinking about buying or selling a practice. As a result, Professional Indemnity Insurance (PII) can often end up as one of the last things on your list – but that doesn’t mean it’s not important. Below, we’ve provided some guidance to help you understand the potential impact of any purchase or sale on your PII. We’ve also listed some steps that you can take to ensure a smooth transaction.

12.2 Liability Limitation Agreements (LLAs)

First of all, it’s important to understand the basis of the cover itself. Unlike many insurance covers, PII is underwritten on a claims-made basis. Simply put, that means in order to have recourse to insurers, you must have a live PII policy in force at the time a claim is made. It is irrelevant whether you held a live policy at the time you completed the work in question. For this reason, firms are required to take out ‘run-off’ cover.