Why do accountants need insurance?
A costly miscalculation
If you file accounts with HM Revenue and Customs and a miscalculation means thousands of pounds aren’t accounted for, your client could find themselves facing a larger-than-expected tax bill. If this happens, they may blame you and take legal action to reclaim the lost money. For an accountant, Hiscox business cover can be tailored to include professional indemnity insurance, which helps with the cost of defending and settling the case. It’s welcome protection, whether your accountancy firm makes a mistake or faces false accusations.
Hackers hold data to ransom
When hackers access a chartered accountant’s files, they can do real damage. Confidential client data could be stolen, and a ransom may be demanded in exchange for its return. Customise Hiscox business insurance for accountants to include cyber and data risk insurance and you’ll be able to speak to cyber specialists in such a case. This can help you to take the required action, promptly, and may strengthen your data security against future threats.
Because professional bodies require it
As you go through your accountancy career you will sit various exams and qualifications. From the AAT for accounting technicians, to ACCA (external link) and ICAEW / ACA (external link) for those working towards chartered accountant status. Once you have passed these exams, you can become a member of their respective professional organisations. And to be a member of these organisations as a practising accountant, you’re required to have professional indemnity insurance.
What insurance is available for accountants?
Cyber and data insurance
What would you do if your accounting systems were hacked, or confidential data was shared with the wrong people by accident? Cyber and data insurance provides cover for crime, as well as unintentional data breaches, which can lead to expense. Alongside financial cover for breach costs, reputational recovery work, and help with fines following privacy investigations, Hiscox cyber and data cover also comes with access to a team of experts to get you back on track.
Employers’ liability insurance
Employers’ liability insurance can offerprotection against claims made against you by employees who have had an accident or fallen ill as a result of their work. For example, if one of your accountants claims you’vefailed to support them with work-related stress. Note that employers’ liability insurance can be required by law (external link) for any business that employs others. You can be fined up to £2,500 for every day you are not covered.
Professional indemnity insurance
Professional indemnity insurance is compulsory for members of accounting organisations like ACCA and ICAEW. PI cover can help to protect you against the cost of legal action if a client claims they lost money or suffered reputational damage as a result of your work, professional services or advice. Whether you’re settling or defending a claim, you can addlegal fee protection when you take out this insurance, too.Furthermore, in some circumstances, professional indemnity insurance for chartered accountantscan be mandatory.
Each business is unique – some accountants may also choose to have public liability insurance.
These are just some of the types of business insurance for accountants that we can offer. We can provide other specific types of cover and build them into a policy that’s tailored to the exact needs of your business.
Get your quoteInsurance for accountants: FAQs
What’s included in Hiscox professional indemnity insurance for chartered accountants?
Hiscox professional indemnity insurance is relevant to many complaints an accountant can face. It can help to cover allegations of negligence, accidental breach of confidence and giving poor business advice.
Should you provide good-faith tax guidance which turns out to be misplaced, we may help to pay related legal fees and compensation. Likewise, if your cashflow forecasts turn out to be incorrect and a client sues, insurance can help with the aftermath.
Our professional indemnity insurance can also be suitable for tax accountants and company registrars as well as auditing and payroll professionals. This means a wide range of industry activities, from filing to invoicing, are covered.
Do accountants need public liability insurance?
Every business entity is liable to members of the public for injuries or property damage that might occur because of its activities. Public liability insurance is designed to help absorb the cost of such cases.
Many businesses can face public liability claims, even if they aren’t public-facing – for instance, an office sign could fall from a commercial building. However, public liability insurance might be more relevant to businesses with frequent client interactions.
Is professional indemnity insurance mandatory for chartered accountants?
The organisations that facilitate the training and qualification of chartered accountants in the UK and globally say professional indemnity insurance is mandatory for their members. The two main bodies for chartered accountants are ACCA and ICAEW.
- ACCA and professional indemnity insurance
ACCA is a global organisation for professional accountants. To become a member of the organisation and an ACCA chartered accountant, you must take and pass the ACCA Qualification. As a member, you are required to have professional indemnity insurance.
- ICAEW and professional indemnity insurance
ICAEW is another professional organisation for accountants. To qualify as a chartered accountant and become an ICAEW member, you must pass the ACA qualification. All ICAEW members must have professional indemnity cover.
Other professional bodies that ask for their members to have PI cover include:
Hiscox accountants’ insurance complies with the guidelines of these organisations, so chartered professionals can take out a policy with the reassurance it meets required regulations.
It’s a good idea for members to get in touch with these bodies to verify the essentials.
If you aren’t a chartered accountant, PI may not be a requirement, but it may still be a welcome addition to a comprehensive insurance policy.