Most of the accountancy regulatory bodies require the accounts to hold a certain level of minimum insurance to protect their practice. Being registered with the various accountancy bodies like CA ANZ, CPA Australia require information about the professional indemnity cover of individual accounting firms and alignment with the AISC requirements.
There are many insurance providers who offer personal indemnity cover and other policies as part of chartered accountant insurance schemes for accounting firms. The accountants must consider the nature and size of their business and the requirements of various regulatory bodies they are interested to affiliate with and get the required cover.
The accountants must consider the various risks they are likely to encounter to determine a suitable chartered accountant insurance policy for their practice. They should consider the governance risks, regulatory risks, business risks and technology risks that the firm might encounter in the course of its business. They should also consider the size and nature of business of the clients and the firm’s employee requirements to get a suitable cover for the accounting firm. There are different insurance policies like the professional indemnity policy, management liability policy, cyber liability policy and others. The accountant must choose an ideal policy depending on the nature of business and cover he intends to have.
Different insurance providers cover different liabilities. It is very important to carefully go through the details of the chartered accountant insurance policy and see the included and excluded list before signing the dotted line. Compare different policies and select a good policy that suits the requirements of the business. In case the accountant uses a sub-contractor, the policy should have an extended clause that covers the liabilities arising out of actions of the sub-contractor.
The accountants must have an up-to -date insurance policy and be regular with their premiums and renewals. Most of the chartered accountant insurance policies offer a “claims made” cover, which means the policy only covers the claims made within the policy period, it does not consider the date of the incident . It is imperative for accountants to properly pay the premiums and keep the insurance policy operational for adequate coverage.