What Insurance for Accountants is Needed?
While every accounting firm potentially has a specific set of insurance needs, depending on its size and a variety of other factors, there are certain insurance for accountants policies that most should consider mandatory parts of their business insurance program:
Professional Liability Insurance:
Know by some as accountants professional liability malpractice or errors & omissions (E&O) insurance, this is easily the most important and vital type of insurance for accountants that all accounting firms will need to have.
This insurance policy will be able to cover most of the legal costs, discovery costs, and damages associated with claims against you or your employees in the course of providing accounting services.
A good broker can guide you towards broader policies that effectively cover the accounting firm for anything you do for a fee or that enures to the benefit of the firm.
No matter whether you are a bookkeeper, CPA, or large accounting firm, you need professional liability insurance, because any mistake or aggravated client can potentially turn into a lawsuit.
General Liability Insurance & Property / Business Owners Policy (BOP):
A staple coverage that will be able to protect you from most types of lawsuits, general liability insurance includes the very important premises liability, which covers injuries that could possibly occur on your property.
General liability is often minimal for accounting firms since almost all business is conducted in the office and most communication with clients is handled via telephone and email.
Property insurance covers your personal property including computer hardware and furniture.
This policy provides protection in the event of a fire, flood, or other unexpected circumstances that affect the building, your property, and your ability to work. General liability and property are often combined into a Business Owners Policy (BOP).
Employment Practices Liability Insurance (EPLI):
The need for this coverage grows in concert with the size of your firm. As the accounting firm adds employees, the issues become more complex and the personalities involved are less predictable, giving the need for EPLI coverage.
EPLI insurance will protect your accounting firm from potential employee-related claims, including discrimination, harassment, failure to promote, and wrongful termination.
Professional services firms are also strongly encouraged to get third-party coverage to protect against claims coming from outside the firm, such as claims made by clients.
Workers Compensation Insurance:
Since this type of commercial insurance is required in just about every state, there’s not much to think about – your accounting firm needs to have it. Thankfully, workers’ compensation probably won’t cost your accounting firm a lot, since an office is not a high-risk workplace.
However, accidents will always happen and workers’ compensation will cover your firm if your employees ever sustain any type of injury at work (whether it’s at your office or anywhere else they may be representing your firm in a professional capacity.
Cyber Liability Insurance:
Accounting firms deal with a lot of sensitive information and often transfer funds, so it’s no surprise that they are constantly being targeted by hackers. CPAs act as the trusted advisors to some firms, adding on registered investment advisory arms for their clients’ funds.
Hackers today are well-trained and are patient enough to watch over your email traffic and attack at just the right time. Or if they are impatient, many have no problem launching a ransomware attack or cyber extortion virus onto your system, both of which could paralyze your firm.