Posted on: June 1, 2023 by Huntersure
Errors & Omission (E&O) insurance is a policy that every accountant should consider to cover their liabilities in the event of a mistake. Professional accountants know their numbers, and their clients rely on them to deliver optimal financial advice. Unfortunately, that kind of service comes with risks. Considering the staggering cost and aftermath of dealing with a lawsuit, obtaining E&O insurance helps provide vital protection.
Why Accountants Need E&O Insurance
Operating in the financial world comes with many risks. Even the best in the business has the potential to make a mistake. Even if the accounting firm did not make an error, a frivolous lawsuit may damage its reputation and cause severe financial trauma that may not come with easy recovery.
E&O offers a way to protect both. As the name implies, it provides coverage against errors such as an auditing mistake or an omission, such as not completing services by the agreed-upon deadline. Similar to the medical arena, clients may sue for costly financial mistakes. Situations that could result in a lawsuit for accountants include:
- Significant expenses that some may overlook while creating a financial statement
- Financial losses regarding taxes due to a perceived error
- Budget overestimation leads to inaccurate financial advice
What E&O Insurance for Accountants Covers
E&O insurance provides accountants peace of mind when faced with potential losses that could disrupt the company. They can customize this coverage to fit the needs of specific industries. Whereas construction contractors may need a policy more focused on contract breaches and liability, accountants have unique needs.
Nowadays, most CPAs have embraced technologies that make their operations run more smoothly, as well as enhance offerings to customers. While beneficial, it also opens the doors to potential risks, such as breach of information. When an accountant has E&O insurance, it often covers the following:
- Network security offenses
- Investment advisor
- Pre-claim assistance
- Personal fiduciary
As long as the client maintains its policy, even claims from the past may get covered. That means the ability to pay for legal expenses, judgments, court fees, and settlements without paying out of pocket.
Why Have More Than Just E&O Insurance
Errors & Omissions Insurance offers an array of benefits for clients, but it does have its limitations. Whether a single accountant or the owner of an accounting firm, creating an umbrella of coverage ensures that all aspects of the business get safeguarded.
Workers’ compensation is a requirement for any business with employees. Likewise, general liability covers bodily injuries. Two other insurance policies include cyber liability and property insurance.
Cyberliability can protect against the worst-case scenario. Cyberattacks can take down a business, especially in the financial sector. Hackers typically ask for an over-the-top amount of money for recovery, making it worth the added cost. Meanwhile, property insurance suits any professional with an office outside the home. It helps protect against any damage to the property or its contents, typically vital files and equipment.
Any professional faces challenges and potential risks. When that risk equates to high financial stakes, E&O insurance offers a way to handle the unknown and keep a business from going under.
Huntersure LLC is a full-service Managing General Agency that has provided insurance program administration for professional liability products to our partners across the United States since 2007. We specialize in providing insurance solutions for businesses of all sizes. Our program features can cover small firms (grossing $2.5 million annually) to large corporations (grossing $25 million annually or more). We make doing business with us easy with our breadth and depth of knowledge of E&O insurance, our proprietary underwriting system that allows for responsive quoting, binding and policy issuance and tailored products to meet the needs of your insureds. Give us a call at (855) 585-6255 to learn more.
Posted in: E & O E & O Insurance
Tagged: e&o errors and omissions Huntersure