The accounting industry is difficult to work in, with so many changing laws and regulations to keep up with over the years. Accountants, CPAs and tax professionals are expected to manage the finances of clients and advise them on a variety of financial and investment strategies. However, one piece of bad advice—or even a perceived mistake—can result in an angry client suing your accounting business.
In today’s litigious society, everyone looks to point the blame elsewhere. If a business fails, the owners frequently turn to the accountants and blame them for shoddy bookkeeping. For this reason, it’s prudent for all accountants and finance professionals to purchase professional liability insurance.
This type of policy covers the costs of errors and/or omissions that may cause a client to make a claim against your business. In short, it protects the assets of your business (and perhaps even your personal assets) from the financial consequences of a claim, whether grounded or frivolous. Remember, even if you follow every accounting standard, you can still get sued by a client.
While there are many concentrations within the finance industry, the great number of professional liability claims comes from tax practices. However, the most expensive claims come from audit work.
Many professional accountants have noted that it’s foolish to operate without professional liability insurance. However, alongside insurance, you can take additional steps to protect your business from such claims. Ensure that at least two employees review contracts, advice etc. before handing them over to clients. Clearly identify the work you will perform and ensure that the client understands by discussing at length. And finally, do not accept just any client; do your homework to ensure that potential clients haven’t previously been involved in litigation.
Speak with an agent today about protecting your accounting business with professional liability insurance. You never know what future event will make you glad you did!
We’ll gladly explain your coverage options. Call Mitchell & Mitchell Insurance Agency at (415) 883-2525 for more information on California professional liability insurance.