As an accountant in Canada, the Chartered Professional Accountants of Canada (CPA Canada) legally requires you to have professional liability insurance.
Your clients trust you with their business financials and taxes. So you’ll want to have business insurance and professional insurance policies in place before offering accounting services. This will ensure you’re protected and won’t pay out of pocket if something goes wrong.
In this article, we discuss the insurance information those offering accounting services to the public will need to know and obtain to protect themself against any potential lawsuits.
Who needs accounting insurance policies?
CPA Canada and CPA Ontario advises any chartered accountant, certified general accountant, charter professional accountant or bookkeeper to have at the bare minimum errors and omissions insurance, also known as professional liability insurance, to ensure you’ve protected yourself and your clients.
Any accounting professional can be held liable for services, and without the right policies in place, you could face costly lawsuits.
What insurance policies do I need as an accountant?
Regardless of whether you work for an accounting firm or you offer professional services to various clients, you’ll need several different insurance policies in place to be protected.
Below are some of the most important policies that accountants need to protect client information and to protect themselves.
1. Errors and omissions (E&O)
Errors and omissions insurance is not only the cornerstone of policies for any accountant but also legally required. This may also be referred to as accounting professional liability insurance. Even the best professionals can miscalculate the taxes or finances of a business. Should this happen, this insurance protects accounting professionals against any claims or lawsuits stemming from any failure to deliver services, financial loss, misconduct, or professional negligence.
An E&O policy provides you with protection and will pay any damages you may be required to provide a client. This also gives you peace of mind, knowing should a mistake occur, it won’t be out of your pocket.
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2. General liability insurance
A general liability insurance policy protects you if a client visits your office, or if you make visits to clients. This will also cover any personal bodily injuries or property damage claims up to your liability limits that were brought against you.
3. Cyber liability insurance
It’s smart to invest in cyber liability insurance. Your client’s data is both valuable and sensitive, should a cyber attack happen it can be costly to recover the information that was stolen.
If this occurs, you may face a class-action lawsuit. However, this policy will pay for legal fees, penalties, and costs to restore the stolen data or systems.
4. Property and contents insurance
If you meet with clients at an office you rent, you’ll need a property and contents insurance policy to protect your equipment and files in case of an accident or theft incident.
If you work from a home office, you should speak with your insurance company about adding a business personal property insurance policy to your general liability policy to make sure you’re fully covered.
5. Workers compensation insurance
If you run your own firm or employ just one person, you’ll need to have a worker’s compensation insurance policy in place. This protects you from being liable if any employee injures themselves at work.
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