Accountancy Insurance

What Insurance does my Accounting Firm need? *

Some of the major types of business insurance covers available to accountants in Australia are explained below and include:

• Professional Indemnity Insurance
• Business Pack Insurance (incl. Public Liability)
• Cyber Insurance 
• Management Liability Insurance

Professional Indemnity Insurance For Accounting Firms *

Professional indemnity insurance is the essential cover for accountants.  In fact, CA ANZ and CPA require accounting firms to take out a minimum level of Professional Indemnity Insurance.

Your Professional Indemnity insurance policy should cover all aspects of your Accounting Practices services and work.

Professional Indemnity provides protection for financial losses which can arise from:

• Errors when undertaking an audit
• Errors in preparation of financial statements
• Negligent accountancy advice
• Accounting and book-keeping errors
• Professional negligence during M&A due diligence
• Client receiving fines and penalties due to your advice given

Professional Indemnity Insurance may help accounting firms stay in business by paying for legal defence costs, public relation expenses, privacy brief costs and settlement of financial losses.

The level of Professional Indemnity cover required and insurers which are suitable, will differ depending on the activities you undertake, for example:

• Financial Accounting for Private Companies
• Financial Accounting for Public Companies
• Audit of Private Companies
• Audit of Public Companies
• Insolvency
• M&A Advisory
• M&A Due diligence
• Tax Accounting
• Superfund Accounting & Audit

Claims can run into the hundreds of thousands of dollars or even millions of dollars, therefore it is important that an adequate level of cover is chosen to protect against major financial loss, which will not only have an impact on your business but could also affect your personal assets.

Business Pack Insurance for Accounting Firms *

Accountants may be able to combine multiple covers in a single business insurance pack policy.

Business Pack Insurance includes:

Public & Products Liability *

Public Liability Insurance is designed to provide your firm protection for:

1. Slip-and-trip accidents that occur at your office – E.g., a client is injured when they slip in your office
2. Damage to third-party property – E.g., you cause damage to the building you are leasing.

Property Damage – This covers your firm’s business contents and stock (if-any) for physical damage due to an event such as fire, storm, accidental impact damage. Your contents can include your fit-out, monitors, furniture, computers, printers or servers.

Theft – Provides cover if you firm is broken into, and contents or stock are stolen.

Machinery Breakdown – This covers the repair/replacement cost if your machinery breaksdown due to a mechanical failure (E.g., break-down of your servers or printers). This does not cover general wear and tear.

Business Interruption – This provides cover for lost income, if your business operations and turnover are impacted due to an insurable event (E.g., fire, storm).

Glass – Often required as part of a lease agreement, this provides cover for replacement of glass in your premise.

Cyber Insurance for Accounting Firms*

Cyber Insurance coverage can protect your business for claims due to a cyber event, some examples include:

• Cyber hacking – Malicious or unauthorised access to your IT infrastructure, which may put your confidential client data at risk.
• Privacy errors – Your acts or omissions that lead to unauthorised disclosure of your client’s data
• Insider and privilege misuse – Unapproved or malicious use of oragnisations resources by insiders or external misuse through collusion, putting your data at risk
• Criminal financial loss – For example, a book-keeper may pay a fictitious invoice on behalf of your client, resulting in a large financial loss

Cyber Event Insurance cover includes coverage for:

• Cyber event response costs (IT forensics, virus extraction, client notification costs, public relation costs)
• Losses to your business due to a cyber event
• Losses to other businesses (e.g., your clients) due to a cyber event (Fines and penalties, regulatory investigations, defence costs)
• Contingent business interruption
• Tangible property
• Criminal financial loss

Management Liability Insurance Accounting Firms *

Management Liability Insurance may provide valuable protection for directors, for specified issues relating to Human Resources, OH&S and Statutory Liability.

Examples of management liability claims include:

• Employee claims for wrongful termination, demotion or refusal to promote
• Employee theft/crime
• OH&S Claims
• Claims where directors/partners can be personally liable, for actual or alleged mismanagement
• Fines and penalties for unintentional breaches of certain statutes
• Tax audit cover