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What Is Professional Liability Insurance For Accountants?

Professional liability insurance, also known as errors and omissions (E&O) insurance, provides coverage for claims arising from mistakes or negligence in the professional services you offer. This type of insurance is essential for accountants and CPAs who handle sensitive financial information and offer expert advice, as it protects against the financial consequences of legal actions taken by clients due to alleged errors.

Why Your Accounting Business Needs Professional Liability Insurance

Running an accounting firm comes with its share of risks. Even the most diligent professionals can make mistakes. Professional liability insurance ensures that your business can withstand claims of negligence, errors, or omissions. Without this coverage, your business could face substantial financial losses, legal fees, and reputational damage.


Are you looking for Business Insurance Coverage? At The Huneycutt Group, we represent over a dozen companies and brokers to help you find the coverage you’re looking for, at the right price.


Is Insurance Required For Accountants and CPAs In North Carolina?

While professional liability insurance is not legally required for accountants and CPAs in North Carolina, it is highly recommended. Many clients may require proof of insurance before engaging your services, and having coverage demonstrates professionalism and a commitment to safeguarding your clients’ interests.

The two types of business insurance that are mandatory by state law are:

What Does A Professional Liability Insurance Policy Cover?

A comprehensive professional liability insurance policy for accountants and CPAs offers crucial protections against a range of risks associated with providing professional services. Understanding what your policy covers is essential to ensure you have the right safeguards in place.

Here’s an overview of the key areas covered by professional liability insurance:

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Errors and Omissions

Professional liability insurance covers errors and omissions made in the course of providing professional services. This includes mistakes in bookkeeping, financial reporting, and tax filing.

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Legal Defense Costs

The policy covers legal defense costs, including attorney fees, court costs, and settlement expenses, even if the claims against you are unfounded.

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Settlements and Judgments

If a court rules against your business, professional liability insurance will cover the settlements and judgments awarded to the plaintiffs, up to the policy limits.

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Data Breach and Cyber Liability

In today’s digital age, protecting client data is paramount. Professional liability insurance can include coverage for data breaches and cyber liability, safeguarding your business from the repercussions of unauthorized access to client information.

Who Should Have Accounting and CPA Insurance?

Professional liability insurance is an essential safeguard for various professionals in the accounting field. Whether you operate independently or run a larger firm, having this coverage will protect your business against potential risks and liabilities.

Here’s a look at who should consider obtaining accounting and CPA insurance:

Sole Proprietors and Small Accounting Firms

Independent accountants and small firms face the same risks as larger entities, making professional liability insurance vital for their financial protection.

Large CPA Firms

With more clients and higher stakes, large CPA firms need robust insurance coverage to manage the increased risk of claims and legal issues.

Bookkeepers and Tax Preparers

Even those specializing in bookkeeping and tax preparation can make errors that lead to significant client losses, making professional liability insurance an important consideration.

Forensic Accountants and Financial Consultants

Professionals in these specialized fields often handle complex and sensitive financial matters, increasing the potential for claims and the need for comprehensive coverage.

Other Professional Lines

Accounting and CPA Claims Examples

Misfiled Tax Return

A CPA files a client’s tax return incorrectly, leading to an audit and financial penalties for the client.

Errors in Financial Reporting

An accountant’s miscalculation results in incorrect financial statements, causing client losses.

Breach of Confidentiality

Sensitive client data is accidentally disclosed, leading to identity theft and financial damage.

How Much Does Professional Liability Insurance For My Accounting and CPA Business Cost?

The cost of professional liability insurance varies based on several factors, including the size of your business, the services you provide, your claims history, and the coverage limits you choose. On average, accountants and CPAs can expect to pay between $500 to $2,000 annually for coverage, depending on their specific needs.

How To Choose The Best Policy For Your Accounting and CPA Business

When selecting a policy, consider:

  • The specific risks associated with your services.
  • The coverage limits and deductibles.
  • The reputation and financial stability of the insurance provider.
  • Any additional coverages, such as cyber liability or business interruption.

How Do I File A Claim?

If you need to file a claim, follow these steps:

  1. Contact Your Insurance Company: Notify them of the potential claim as soon as possible.
  2. Gather Documentation: Collect all relevant documents, including client contracts, communication records, and financial statements.
  3. Submit Your Claim: Provide a detailed account of the incident and submit all necessary documentation.
  4. Cooperate with the Investigation: Work with your insurance provider during the claims investigation process.
  5. Resolution: Once the claim is validated, your provider will handle legal defense costs and any settlements or judgments.

Why Choose The Huneycutt Group?

Choosing the right insurance policy can be overwhelming, but The Huneycutt Group is here to make the process easier. Here’s why you should consider us for your insurance needs:

  • Expertise: Our team has extensive experience in the insurance industry, specifically in providing coverage for accounting professionals.
  • Personalized Service: We take the time to understand your unique needs and provide customized insurance solutions.
  • Local Knowledge: As a North Carolina-based agency, we are familiar with the specific legal and regulatory requirements of the state.
  • Commitment to Excellence: We are dedicated to providing top-notch customer service and ensuring that you have the coverage you need to protect your business.

Contact us today to learn more about how we can tailor an E & O policy to meet your specific needs and protect your business.

Insurance Companies And Brokers We Represent

Builders Mutual
Liberty Mutual
The Hartford
Frontline
Philadelphia Insurance

Lloyds of London
Berkshire Hathaway
NC Rate Bureau
Johnson & Johnson
AmWins
Hanover/RPS
Tapco

Appalachian Underwriters
Jackson Sumner
IPC
Allrisks
Orchid

Contact The Huneycutt Group

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