Insurance for Accountants

Any of these unforeseen events can happen to any business and it might be a good idea to consider taking out business insurance.
You’re also probably aware that shopping around and comparing policies makes good financial sense. As an accountant, here are some things you might want to consider when comparing business insurance policies from different insurers.

What are the four types of business insurance that could typically be relevant for accountants?

Professional Indemnity insurance.

As you’re probably aware, all CPA Australia Public Practice Certificate holders are required to hold Professional Indemnity Insurance as a condition of membership. And that’s with good reason.

Professional Indemnity (PI) insurance* is designed to help respond to claims against your business for losses as a result of actual, or alleged, negligent acts or omissions in the provision of your professional service or advice.

Common reasons for claims against accountants.

There are many reasons that accountants can be exposed to liability, here are a few of the key areas.

• Giving a client incorrect tax advice which leads to them being fined.
• Failure to identify or disclose irregularities whilst conducting audits.
• Errors in accounts or book-keeping.
• Incorrect lodging of returns.
• Breach of confidentiality

Professional Indemnity Insurance can also assist with the legal costs you may incur responding to, or managing, claims covered by the policy. Professional Indemnity insurance is an important form of protection for businesses, like accountants, that provide specialist services or professional advice.

How is Professional Indemnity insurance different from Public Liability insurance?

Both Public Liability and Professional Indemnity insurances help cover your business against third party claims, the difference is, how those claims arise. Public Liability insurance* helps cover you against claims involving injury or property damage a customer, supplier or member of the public sustains due to your negligent business activities. That could even be a trip on an incorrectly installed doormat. Professional Indemnity Insurance, on the other hand, helps cover against claims resulting claims from the professional services you provide to your clients.

So if your accounting practice is run virtually, then you may decide you don’t need the protection offered from Public Liability insurance. However, if you do see clients in a physical office, then it’s worth considering.

Cyber Liability Insurance.

From 1 July 2019 to 30 June 2020 the Australian Cyber Security Centre (ACSC) responded to 2,266 cyber security incidents and received 59,806 cybercrime reports (that’s one report every 10 minutes!). Meanwhile, The Australian Competition and Consumer Commission’s (ACCC) Targeting Scams 2019 report identified Australians lost over $634 million to cybercrimes in 2019. There’s no doubt that cybercrime is on the rise.

It’s a serious and costly business, and you don’t even have to be negligent to be a victim. That’s why it’s worth considering Cyber Liability insurance*. It can help protect against legal costs and expenses (including compensation payments) relating to the following incidents:

• Data breaches
• Theft or loss of client information
• Business interruption costs
• Forensic investigation
• Data recovery
• Extortion
• Fines and penalties
• Crisis management costs (to restore your businesses reputation after an attack or data breach)
• Legal costs from any ensuing civil action taken against you or your company

Business Interruption Insurance

If your business suffers an insured incident, such as property damage or a fire, Business interruption insurance* can provide you with cover for the resulting loss of income and increased operating costs. It can also help your business recover from an insured event by contributing some of the ongoing expenses such as wages or rent. Business Interruption insurance could help you bounce back quickly and keep stress levels to a minimum.

Building and contents insurance.

This is a bit like your home and contents insurance, with a business perspective. Building Insurance* helps cover for loss and damage to buildings you own, due to an insured event such as fire, storm, wind damage etc. Contents insurance* helps cover for loss of, or damage to, items such as business equipment, files, records and furniture belonging to you at the insured location.

So how can iSelect and BizCover help me find a policy for my business?

iSelect and BizCover have teamed up to help make it easier for you to find suitable insurance for your accountancy business. BizCover has a comparison service which makes it simple to compare business insurance policies from a range of Australia’s top business insurance providers. It makes finding a policy that suits your business easy.

Last updated: 20/08/2021

*As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording.

Sources:
1. https://www.cpaaustralia.com.au/public-practice/your-public-practice-firm/professional-indemnity-insurance
2. https://www.cyber.gov.au/sites/default/files/2020-09/ACSC-Annual-Cyber-Threat-Report-2019-20.pdf
3. https://www.accc.gov.au/publications/targeting-scams-report-on-scam-activity/targeting-scams-2019-a-review-of-scam-activity-since-2009