Insurance for Accountants

Why do accountants need insurance? 

Even the most meticulous and diligent accountants aren’t immune from the odd error or unexpected event. Imagine doing a client’s taxes and accidentally miscalculating their deductions or missing an important financial document. 

Different types of insurance can cover financial losses from errors and other events like theft or natural disasters, which may result in expenses such as repairs, replacement costs, and legal fees 

In fact, you might even be required to have insurance as an accountant. If you’re a tax agent or a Certified Practising Accountant (CPA) Australia or Institute of Chartered Accountants Australia (ICAA) member, professional indemnity insurance is an industry requirement.  

What does professional indemnity insurance cover? 

A big part of your job involves making financial recommendations and dispensing advice to your clients. But what happens if you make a mistake and your client loses money because of it? 

Professional indemnity insurance may provide financial protection if a client makes a claim against you for alleged negligence, errors, or omissions in the performance of your professional services. It may cover legal costs and claims for damages, depending on the policy’s terms and conditions. 

Helpful tip

Professional indemnity insurance covers claims arising from professional advice or services provided, whereas public liability insurance covers third-party injuries or property damage resulting from business activities, such as a client slipping at an office and sustaining an injury.

How much professional indemnity coverage do accountants need? 

Remember how we mentioned that professional indemnity insurance is mandatory for CPA and ICAA members, as well as tax agents? There’s actually a minimum amount you have to take out, too.  

Australia-based members of either organisation must hold a minimum of $2 million in professional indemnity insurance, while the Australian Tax Practitioners Board mandates that tax agents need at least $250,000 of professional indemnity cover.¹Tax Practitioners Board – Professional Indemnity Insurance

However, this number could be even higher depending on: 

What are the dos and don’ts of professional indemnity insurance? 

Do

Compare policies between insurance providers to weigh up different features, exclusions, add-ons, premiums and other variables. 

Go through your policy with a fine-toothed comb to understand your coverage. Ask your insurer if you’re stuck or need clarification. 

Keep a record of all your client transactions, including communications, transactions and advice given, which may help you defend yourself against potential claims.

Don’t

Underestimate your risk and go for lower coverage simply to save on premiums. It’s about finding the right balance of coverage and cost.

Forget to review your policy at least annually to check it still meets your business needs, especially if your business grows (either in staff or revenue) or you start offering new services.

Ignore your excesses, as this determines how much you’ll pay out-of-pocket if you make a claim.

What other types of insurance might accountants need? 

Beyond professional indemnity insurance, other types of insurance that are available for accounting businesses are listed below. 

Cyber liability insurance 

You’re likely dealing with a lot of sensitive client information, financial data and confidential records. If something happened to that data – like if your system got hacked and all of your clients’ personal information got leaked – you might be facing some pretty serious expenses, such as legal fees and compensation. 

Cyber liability insurance may help protect your business from financial losses related to cyber incidents, such as data breaches or cyberattacks. It can cover costs associated with data recovery, business interruption, legal fees and crisis management. 

Business interruption insurance 

Say your office got flooded and you were unable to access your workspace, forcing you to cease operations for a little while. Business Interruption insurance could help keep your business afloat until you can get back to work.  

Business interruption insurance may provide financial protection for the loss of income and increased costs of operating your business caused by a specified insured event (such as property damage or fire). It is also designed to assist your business to recover from an insured event by paying ongoing expenses such as wages or rent. 

Building and contents insurance 

Whether you own or lease your office, building and contents insurance could be an incredibly valuable way to protect the building itself and everything in it. 

Building and contents insurance may cover the cost of repairing or replacing your office building and its contents if they are damaged or destroyed by an insured event, such as fire, theft or storm. The exact coverage and exclusions will depend on the policy terms. 

Where can I find and compare business insurance? 

Looking for professional indemnity insurance and other types of accountant insurance? You can compare policies from several of Australia’s leading insurance providers here on iSelect. In partnership with BizCover, we’ve launched a business insurance comparison tool that lets you find the right policy to suit your needs.

This information is general only and does not take into account your objectives, financial situation, or needs. It should not be relied upon as advice. Insurance services are provided by BizCover Pty Limited under its Australian Financial Services Licence (AFSL 501769). iSelect acts as a white-label partner of BizCover, facilitating access to insurance products. As with any insurance, cover will be subject to the terms, conditions, and exclusions contained in the policy wording.© 2024 BizCover Pty Limited, all rights reserved. ABN 68 127 707 975; AFSL 501769