What Insurance Do Accountants and Bookkeepers Need?
You’re responsible for keeping financial records. Your clients count on you for your integrity, ethics, and skills as an accountant or bookkeeper.
As an accountant or bookkeeper, you can face a variety of risks, from a mistake to claims of negligence. Protect yourself with an insurance package for accountants and bookkeepers.
Are you an accountant with an office downtown on King Street West or on Yonge Street? Do you have an office on Danforth Avenue or on Don Mills Road? Or are you more uptown on St. Clair Avenue or Lawrence Avenue?
Are you a bookkeeper with an office on Eglinton Avenue West or Greenwood Avenue or Huntley Street?
No matter your location in Toronto or anywhere in Ontario, your Western business insurance expert will give you top-notch advice and ways to save on insurance for your accounting or bookkeeping business. We’ll get you customized insurance to protect your investment.
Do you know that any firm engaged in the practice of public accounting or providing accounting services to the public needs to have professional liability insurance? Insurance information must be provided on an annual basis to CPA Ontario.
What is insurance for accountants and bookkeepers?
Insurance for accountants and bookkeepers is a package of insurance coverages that protects you against the specific risks of providing accounting services, such as negligence or errors and omissions.
You can be held liable for services and without the right policies in place, you could face costly lawsuits.
Accountant and bookkeeper insurance helps protect you from these 3 claims:
1. Cyberthieves hacked your office’s computer system and your clients’ financial information was stolen. Cyber insurance will help you pay the cost of restoring your system. You may also be liable for damages to third parties whose information has been stolen and you may have to pay for notification expenses to inform clients affected by a breach. Cyber insurance would also help with these expenses.
2. A client visits your office, slips, and falls on some water on floor and severely injures her back. The client files a personal injury lawsuit against your firm. Commercial General Liability Insurance, also known as slip and fall insurance, could help cover the medical expenses and legal fees.
3. You overstated a client’s revenue and the client used that information to get a loan that was denied. Errors and omission insurance may cover your legal defence fees as well as the cost of a successful lawsuit against you.
How much will my accounting insurance package cost?
Factors that will influence the cost:
- Years of experience
- Annual revenue
- Number of employees
- Past claims
Here’s an insurance check list for accounting and bookkeeping firms:
- Do you have the best business insurance rate for your business?
- Do you have the right amount for your deductible and regularly review to make sure it’s the right amount for your business?
- Is your number of employees up to date?
- Are you using your personal car for business purposes?
At Western, we will save you time and money by doing the insurance shopping for you to find an accounting or bookkeeping insurance package that suits your business at the right value for you.
What do I need in my accounting and bookkeeping insurance package?
Errors and omissions (E&O): It’s also called Professional Liability Insurance.
Errors and omissions insurance helps protect your accounting or bookkeeping business against claims involving charges of professional negligence or failure to perform your professional duties.
E&O insurance covers lawsuits alleging neglect, misconduct, or failure to deliver advice or services as promised.
Whether a claim is justified or not, defending a legal action can be expensive and have financial effects on your business.
Examples of E&O (professional liability insurance) claims can include:
- Work mistakes
- Claims of negligence
- Overspending
- Undelivered service
- Missing a deadline
Note that errors and omissions insurance typically does not provide coverage for:
- Criminal, dishonest, or fraudulent acts
- Incorrect estimates of profits or economic returns
- Cost guarantees or price estimates
The minimum amounts of E & O insurance (professional liability insurance) apply to all firms engaged in the practice of public accounting or providing accounting services to the public. The required minimum limits are as follows, per claim:
- $1 million for a firm of one member
- $1.5 million for a firm of two or three members
- $2 million for a firm of four or more members
Commercial General Liability (CGL) Insurance: This type of insurance covers third-party property damage or bodily injury.
It can help you with a lawsuit alleging personal injury, false advertising, and libel or slander.
- Commercial general liability insurance generally covers medical fees, legal expenses, and settlements regardless of the outcome of a lawsuit by a customer against you.
- Your CGL insurance policy should protect you from libel, slander, copyright infringement, and false advertising allegations.
Without commercial general liability insurance, you would be responsible for paying any liability costs out of your own pocket.
Cyber Insurance: Your accounting or bookkeeping business likely electronically stores confidential data about your clients. You use email and likely have a website, too. All of this makes you a target for cybercriminals.
If your computer system is hacked, cybercriminals can sell the information or hold it for ransom. Without cyber insurance, you will have to pay out of your pocket for the cost of restoring your system. You may also be liable for damages to third parties whose information has been stolen and you may have to pay for notification expenses to inform parents affected by a breach.
Commercial Property Insurance: It can cover losses due to fire or lightning, including removing property to protect it from further damage. You can also include vandalism and malicious mischief as part of your commercial property package.
To protect your business in the event of a sewer backup, you should consider adding sewer backup or overland flood coverage extensions, which standard business insurance policies typically do not cover.
Business Interruption Insurance: It’s an additional property insurance coverage that covers loss of income if your accounting or bookkeeping business suffers a disaster, and your business premises need to be temporarily closed. This type of coverage can mean the difference between reopening and going out of business.
Crime Insurance: This type of coverage can protect your business from losses due to employee dishonesty, such as forging your signature or withdrawing money from your account.
Counterfeit money or money orders: Provides coverage for purchases made with counterfeit cash or money orders.
Depositor’s forgery: Provides coverage if your bank accepts business cheques that were stolen and used for fraudulent purposes.
It also covers credit card, debit card or automated teller card fraud.
Commercial Auto Insurance: If you have a business car that you use as part of your professional services business, it needs commercial coverage as part of your insurance package. Your personal car insurance usually won’t cover your accounting or bookkeeping business.
What do I do if I have an insurance claim?
- Contact your broker immediately after any business-related mishap. Waiting to file a claim can confuse insurers about the severity of the damages to your business.
- Know your policy so that when you contact your broker you are familiar with what will be covered or not.
- Document the damage. Take photos right away and write down what happened.
- Do not throw away damaged goods after taking photos. Keep the physical evidence so that your adjustor can see it.
- Do not invite lawsuits. Don’t say anything that could be used against you, especially if you aren’t sure what happened.
- Be honest about what your damaged property is worth. Damaged commercial property is generally valued according to its actual cash value or replacement value.
Western Insurance has licensed BUSINESS INSURANCE EXPERTS to get you the right insurance package for your accounting or bookkeeping business. Our experts are available now to help you navigate the business insurance journey to protect you and your accounting or bookkeeping firm.
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