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Do Accountants Need Professional Indemnity Insurance?

It depends on whether or not the accountant is chartered or not. An accountant who is chartered needs professional indemnity insurance (PII) as part of their trade body membership. Chartered accountants are required by their respective accountancy trade bodies to hold a minimum level of professional indemnity insurance. The amount of cover needed is calculated using different metrics by each body.

Unqualified accountants who are not chartered do not need professional indemnity per se, but getting cover is still considered to be a sensible choice for most accountancy businesses.

Business accountants handle financial transactions and track financial information for their clients, so mistakes or problems with work can have significant financial consequences for a client – and for the accountant, if they’re not protected by professional indemnity insurance.

This article will explain the differences between professional indemnity requirements for chartered and unqualified accountants. To learn more about PII or other types of cover, read the NimbleFins accountants professional indemnity insurance guide, where you can find examples of calculations for minimum insurance requirements for different trade bodies.

Insurance requirements for chartered accountants    

Each of these six accountancy bodies operating in the UK has different professional indemnity insurance requirements. For example, the Association of Chartered Certified Accountants (ACCA) requires a minimum amount of cover for each and every claim of at least £50,000, but most firms will require a higher limit that is based on the firm’s total annual fee income.

A chartered accountant will need to abide by the rules of their trade body in order to maintain their membership and will need to provide proof of coverage on an annual basis to the trade body.

Trade body members typically need to satisfy three types of criteria when buying PII. First, a chartered accountant must buy from a participating insurer. That is, there are only certain insurers qualified to provide accountancy insurance to chartered accountants.

Second, the policy must abide by the minimum policy wording as dictated by the trade body. That is, there is certain language regarding what is covered and conditions that the policy must meet. This ensures consistency across the industry so that accountants have at least certain coverages.

Finally, each accountant will have to obtain certain minimum limits of insurance. The accountancy bodies have their own unique calculations to determine these limits. But they usually impose certain minimum levels and ramp up from there depending on two factors: the type of work engaged in and the amount of fee income generated from these activities.

Insurance requirements for non-chartered accountants         

Non-chartered accountants are not usually required to hold professional indemnity insurance. However, in most cases, a non-chartered accountant should consider buying a policy. Not only will it protect the accountant and client financially in case of a covered event, but it may help the accountant secure business. Many clients will look for their accountant to be covered by a suitable policy. In fact, some may insist on it and may even ask to see the certificate of insurance before signing on.

An accountant without professional indemnity could face financial ruin if they make a significant mistake regarding a client’s finances or taxes. Why? Without insurance, the accountant would be directly liable themselves to pay any legal defence costs as well as any compensatory damages. And if an accountant was unable to fund these expenses then it’s the client who would bear the loss.

So even while professional indemnity insurance might not be required for a non-chartered accountant, it should certainly be strongly considered as a part of the business’s risk management practices.

Other types of business insurance for accountants

In addition to professional indemnity insurance, an accountancy practice is likely to want other types of insurance as well. Public liability is for covering claims related to personal injury or property damage claims made by third parties, for instance, a client who slips on a wet floor and is injured whilst visiting the accountancy practice. Or business contents and equipment insurance to protect things like furniture, computers, phones and printers from theft or loss due to events like fire and flood.

An accountant should also ensure they have declared business use on their car insurance if they drive to visit clients. Legal expenses cover helps if a client has a contract dispute or needs assistance collecting a debt from a non-paying client, or faces an HMRC tax investigation. And, importantly, an accountant business that has hired any staff or employees is obligated by law to buy employers’ liability insurance.


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