The Importance of Professional Indemnity Insurance for Financial Accountants
As an accountant, you’re responsible for helping your clients make huge, important decisions. The advice you give has the potential to make a massive impact on your client’s business and personal finances. Therefore, if you make a mistake, the consequences to your client could be huge.
That’s where professional indemnity insurance comes in. Protecting your business in the event of a negligence claim, it can literally save you from going bankrupt! So what is it and how can it help?
Understanding professional indemnity insurance
Professional indemnity insurance is exclusively designed for professionals who offer their own unique skills and knowledge. It’s especially popular in the accountancy industry, helping to protect against all kinds of mistakes. Just some of the things it can protect you against include:
- Loss of data and/or documents
- Intellectual property
It’s not just the advice you give to clients that can cause an issue; you could also accidentally lose vital documents and data, or infringe copyright without realising. It’s worth noting that not all professional indemnity insurance policies cover all of the above. The range of cover does vary, making it important to opt for this type of insurance from a well-known, trusted company.
Why it’s important
The number one reason professional indemnity insurance is important for your business is because of the financial devastation it can protect you from. Any type of claim made against a business can be devastating, but when you’re dealing with financial mistakes, it makes them even more damaging. The claims will be exceptionally high if something does go wrong, so unless you have thousands, if not millions, spare in the bank, professional indemnity cover is a must.
In the event you are taken to court, the insurance will cover not just the cost of defending yourself, but any damages you may have to pay out. Of course, this depends upon how much cover you take out. As with all types of insurance, there are different levels of professional indemnity insurance that you can take out. Always consider the amount you’re likely to be sued for if something does go wrong.
Overall, if you are working as an accountant, you will be required to have some form of professional indemnity insurance in order to practice. However, it’s recommended you take out more than the minimum cover to ensure you are adequately protected. It may seem like an unnecessary expense, but you need to think about whether you’d be able to afford not to have it in the event of a claim.