What Insurance Do Toronto Accountants Need?
As an accountant or bookkeeper, you can face a variety of risks, from a mistake to claims of negligence. Do you have enough commercial liability insurance to protect your Toronto accounting or bookkeeping business from lawsuits?
A customized insurance policy for Toronto accountants and bookkeepers that’s focused business liability insurance will help protect you financially from a legal claim, third-party injury, or cyber-attack.
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Wherever your small business is located in Toronto, the Greater Toronto Area (GTA), or elsewhere in Ontario, a Western Financial Group business insurance broker will get you commercial coverage that uniquely protects what you do.
Western is a trusted, national insurance brokerage that has partnered with Canada’s top insurance companies to provide commercial insurance. We work with our insurance partners to find the best business coverage at the best rate for you.
We make the process easy by getting insurance quotes for you to choose from and giving you policy coverage options that suit your Toronto business’s specific needs at the right value for you.
Did you know? 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 Toronto accountants and bookkeepers?
Insurance for Toronto 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.
Liability insurance is the cornerstone of your commercial insurance package. You can be held liable for accounting or bookkeeping services you provide and without the right policies in place, you could face costly lawsuits.
Examples of how Toronto accountancy insurance helps protect you from these 3 claims
- Cyberthieves hacked your Toronto office’s computer system and your clients’ financial information was stolen. Cyber liability 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 help with these expenses.
- A client visits your Toronto bookkeeper’s office and slips and falls on some water that had been spilled on the floor. The client severely injured his back and 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.
- You overstated a client’s revenue and the client used that information to get a loan that was denied. The client has sued you. Errors and omission insurance can help cover your legal defence fees and the cost of a lawsuit against you.
Ask your Western Financial Group business insurance expert if accounting firm has enough liability insurance to protect it financially against lawsuits.
How much will my Toronto accounting insurance package cost?
Factors that will influence the cost:
- Years of experience
- Annual revenue
- Number of employees
- Services provided
- 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?
Top liability coverages that Toronto accountants need
Errors and omissions (E&O)
It’s also called professional liability insurance.
Errors and omissions insurance helps protect your Toronto 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
CGL insurance covers third-party property damage or bodily injury to a client.
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 helps 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
Cyber liability insurance is an important business insurance coverage for Toronto accounting firms, given the popularity of credit, debit, and online payments. Cyber liability insurance will help protect your company financially in case of a cyber-attack.
Depending on the size of the data breach and the information that was taken, the customers who are affected can hold you liable and sue you for damages. That’s when cyber insurance can protect you financially.
Other insurance coverages for Toronto accounting businesses
Commercial property insurance
Commercial property insurance keeps your Toronto bookkeeping business protected from property losses, such as theft or vandalism. You can also add earthquake insurance, sewer backup or flood coverage extensions to protect your accounting business because these coverages aren’t typically included in your business insurance.
Business interruption insurance
Business interruption insurance helps support your Toronto accounting business when it can’t operate due to a covered loss. You’ll be responsible for bills such as repairs, rent, and payroll even if your business is forced to close temporarily.
Some examples of losses that can force your accounting business to shut down:
- Your moving business is damaged by fire or vandalism
- A disruption in your supply chain
- Damage to a neighboring business prevents your business from operating
Business interruption insurance can help with expenses such as payroll, rent, utilities, property taxes and relocation of your moving business.
Note that business interruption insurance is typically purchased as an add-on, also called an endorsement, to a standard commercial property insurance policy, rather than a standalone policy.
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 you’re Toronto 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.
Here’s a commercial insurance checklist
- Do you have the best Toronto business insurance rate that suits your work?
- Do you have the right amount for your deductible and regularly review it to make sure it’s the right amount for you?
- Are you or your employees using personal vehicles for work?
Western Financial Group has licensed BUSINESS INSURANCE EXPERTS to get you the right insurance package for your Toronto accounting or bookkeeping business. Our experts are available now to help you navigate the commercial insurance journey to protect your Toronto business.
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5 FAQs
Why do accountants need professional liability insurance?
Professional liability insurance protects accountants and bookkeepers from lawsuits arising from mistakes or omissions made when providing their services. This type of insurance helps covers legal fees and any settlements or damages owed. A Western Financial Group business insurance expert can help you with how much professional liability your accounting business will need.
Why is business liability insurance important for accountants?
Business liability insurance is important for accountants because it provides financial protection against lawsuits. Errors and omissions (E&O) insurance, cyber liability insurance, and commercial general liability (CGL) insurance are the pillars of your commercial insurance as an accountant.
What are the potential financial consequences without liability coverage when accountants make errors?
Without liability coverage for errors, such as professional liability (also called Errors and Omissions (E&O) insurance), accountants and bookkeeping professionals face potentially severe financial consequences. They would be personally responsible for all legal defense costs, settlements, court costs, and any judgments resulting from claims of mistakes, negligence, or omissions.
What are common mistakes that accountants make?
Filing errors and misclassifying deductions on tax returns and missing tax filing deadlines. Calculation errors, such as overestimating or underestimating tax liabilities, and omitting or forgetting to file required forms. Providing incorrect tax advice and negligence in not adhering to professional standards are also mistakes that accountants can make. Consult with a Western Financial Group business insurance expert about liability coverage for your accounting business.
Why is miscommunication a frequent risk in accounting services?
Accounting relies on precise, clear, and timely exchange of information between accountants, management, and clients. When communication breaks down, it can cause budgeting mistakes, delays or misinterpretations of financial reports, and non-compliance with tax and regulatory requirements.