Should You Be Covered By Professional Indemnity Insurance?
In todays cutthroat world, in which people have be known to make a living suing others
, professional indemnity insurance is a necessity for any business that doesnt want to find itself stunned by a vast legal bill. Although risk management is an essential part of all industries, few professionals are at more risk from being at the wrong end of legal proceedings than accountants; many insurance providers now even have separate, highly specialised policies designed solely to protect accountants from the numerous risks involved in their industry! Just a few of the cases in which accountants may find themselves subject to a professional liability lawsuit include loss of documents or personal information, official inquires into professional conduct, legal fees from court proceedings, damages awarded for liability and fraudulent or dishonest service. In all these situations, an accountant can stand to lose significant amounts of money and suffer horrendous damage to their reputation, which can result in an enormous drop in business.It doesnt take much imagination to create a potential situation that could very easily arise, in which an accountant is held responsible for sizeable losses for an individual or company. In fact, given that the role of an accountant is often to offer advice regarding where is best to invest money, the risks are immediately apparent from the outset! To give an example, an accountant could easily make a small mistake in a complicated balance sheet that causes a company to unknowingly make rash financial decisions, resulting in a considerable loss of money. In this case, the accountant has made a small mistake in his professional services that has resulted in a large loss for a client and can hence be held liable for damages if client chooses to claim which, in cases like this, they almost certainly will. Although accountancy can be a well paid job, few individuals could afford to pay even a single large claim for damages from a company that has lost thousands or even millions from a single small mistake! It is at this point that the importance of professional indemnity insurance for accountants becomes apparent.
Professional indemnity insurance covers accountants for the damages for which they may be held liable, should they mistake a mistake. It also provides the accountant with a specialised legal team, who will take the case through all the court proceedings and even cover the legal costs. Although the broad coverage required by accountants doesnt come cheaply, it does bring with it a peace of mind that takes a large part of the stress out of one of the most demanding professions. Few things are worth more than knowing you are prepared for any risks and problems that may arise from your job; perhaps even the enjoyment will return to projects that would otherwise be nerve-wracking from start to end.
Professional indemnity insurance is available for accounting professionals of all sizes; from large partnerships and companies to individual accountants, and covers everything from legal fees to the replacement of a partner, should somebody fall ill during a job. Even work that has already been completed can be covered by retroactive professional indemnity insurance, meaning its never too late to cover yourself and protect your business, bank account and reputation from the risks of the profession.
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