Common Issues that Require Coverage for Professionals
The need for errors and omissions (E&O) insurance includes professionals across a wide range of industries, and some of the people who can benefit by having E&O insurance are doctors, lawyers, architects, and engineers, to name a few. There are however, many others who need this type of coverage and chief among them are accountants, many of whom can definitely benefit by purchasing a policy of this type.
If your business is providing a service to clients for a fee, then chances are you could be sued and therefore you have a definite exposure to address. Just consider what could happen if, for any reason, the service you perform for a client is not done correctly, perhaps you miss a deadline, and this winds up costing your client money, or serious harm to his or her own reputation. Theyre likely to seek retribution through the court system and this illustrates your need for accountant professional liability insurance.
Claims filed for malpractice
Claims against accountants can range from a number of unfortunate missteps, including failing to file an extension resulting in a penalty, or providing a client with poor advice. The majority likely stems from return errors that hopefully can be adjusted without fines, but malpractice often results from poor communication with clients as opposed to any errors due to the complexities of the tax code.
Most of these problems can be avoided through better quality control procedures. CPAs have an ethical duty to handle the business of their clients with proper care and avoid errors and omissions in the work they submit. Some mistakes loom larger than others and will have a greater impact on clients. This can result in a loss of trust, which is certainly bad for business. You’ll want to avoid situations where there is a potential for malpractice damages and will require the need for a legal defense.
The best time to buy accountant professional liability insurance is before an error occurs. If you’re an accounting and tax professional and you know you’re likely to encounter these kinds of exposures, make sure that a policy for errors and other mistakes exists as a part of your insurance portfolio.