E&O Insurance for Accountants: A Breakdown (2024)

Accounting is a riskier job than you think. That’s why you need to know about E&O insurance for accountants.

A day in the life of an accountant is a busy one. You’re organizing and storing client financial records, cash flow statements, bank reconciliations, loss statements, and all the monetary matters in between. As an accountant, you help businesses (and that cousin, aunt, sister, or sister’s dog) keep their finances in order by managing their accounts and transactions. But have you ever wondered what could happen if you lost this confidential information or had it taken away from you?

While you likely monitor those types of financial transactions, you may be looking for help managing your company’s risks. For example, you might be curious about how to properly insure your business to protect your livelihood from the unknown. You may think that the accounting business simply requires a general policy for business owners, but in most cases, it’s just not that simple. In fact, errors and omissions insurance for accountants may be even more important.

Lucky for you, we know insurance. And we’ll cover everything you need to know for your business, including why you might want to consider purchasing errors and omissions coverage.

What is Errors and Omissions Insurance?

First, let’s define what an Errors and Omissions Insurance policy is and what it can cover. Also known as E&O insurance or Professional liability insuranceThese policies can protect accountants from inadvertent errors or mistakes.

The fact that some of what this policy covers is spelled out in its name can help you better understand what it is supposed to protect against.

Accountants may seem superhuman to the mathematically challenged and organizationally averse, but in reality they are just people. And humans make mistakes. There’s that word again: errors.

It’s entirely possible that you make a mistake, forget something, or miscommunicate with a client. However, the unfortunate thing in life is that any mistake or omission you make could result in a lawsuit, especially when it involves other people’s money.

Errors and omissions policies are implemented to help cover your business in the event of an unplanned mishap. It is insurance that keeps you and your company protected against civil suits for negligence, common errors, omissions, and claims for misrepresentation.

However, when it comes to E&O insurance for accountants, you’ll need a few more details.

The Benefits of E&O Insurance for Accountants

Errors and omissions insurance will help protect your accounting business from a lawsuit filed over claims that you or your company made mistakes. Maybe you lost a client’s financial records in an office move or forgot to file an extension for a mandatory tax audit.

Sure, human error can be the cause of many potential errors, but with 58% of American accountants When using automation to increase productivity and already 20% of US accounting firms use artificial intelligence, errors made by machines are also likely to occur. We’ve all seen iRobot, right?

E&O insurance for accountants would cover costs resulting from legal action incurred due to any type of irregularity.

It is worth noting that this policy will only cover unintentional errors. Intentionally misleading a customer is not something that is covered.

Quick tip: Keep a record of customer agreements, SOWs, and transactions made so you can prove that any misunderstandings or mistakes were not made on purpose. It is not a “get out of jail free card” but also a solid security for honest mistakes.

If you do not have an E&O insurance policy for accountants, you and your firm will be responsible for any settlement costs determined, not to mention legal fees. Beyond that, you will need to spend time on your advocacy and, as a result, you may miss out on opportunities to work with other clients. Plus, as if making a mistake and having to pay for it wasn’t bad enough, not having any support throughout the entire retribution process can be absolutely devastating. In many cases, E&O insurance for accountants will provide you with legal advice and defense, and having that help throughout the litigation can make all the difference.

Where and How to Get E&O Insurance for Accountants

You can find an errors and omissions policy at any reputable insurance brokerage. That being said, you may want to start with a company that offers customized insurance plans. This way, you can bundle the different policies you need to get the most comprehensive plan.

For example, Embroker policies protect against claims of errors and omissions in your work and can also protect your personal assets should you become vulnerable to a lawsuit.

The cost of errors and omissions insurance for accountants depends on several factors, including your industry, coverage limits, the size of your company, and any prior lawsuits. But rest assured knowing that Embroker will find you the best coverage at the best price.

Other Important Insurance Coverages for Accountants

E&O insurance for accountants is a must-have policy. But you’ll also want to consider getting some of these other types of insurance policies for accountants:

• Business Owner Policy: This type of insurance will include a combination of coverage types including a general liability insurance package and commercial property insurance.
• Commercial auto insurance: Similar to personal auto insurance, this policy would cover vehicles used for business purposes, including company vehicles in the event that you have multiple employees who may travel for sales consultations or presentations.
• Workers Compensation: Another insurance policy you’ll want to have if you run your own accounting business and have multiple employees, Workers’ Compensation insurance will cover the care and compensation of your staff if they are injured while working in your office or while traveling for business. related to work. Honestly, slips and falls happen more often than you think.
• Cyber ​​Liability Insurance: You may also want to consider obtaining cyber liability insurance. As you know, accounting is no longer a stack of papers at the end of a desk. You work with sensitive financial records digitally and must protect against potential hacking of this information.

Embroker’s team of insurance professionals is here to help because we know that addressing your insurance needs is neither easy nor straightforward. And that’s why we work with you from start to finish, and we’re always just a call or message away.