Professional Indemnity Insurance for Accountants

What does professional indemnity insurance cover?

Professional indemnity insurance is a form of insurance that covers professionals against claims of negligence arising from an alleged act, omission or breach of professional duty on their part.

A typical professional indemnity insurance policy will cover for things such as:

• Court attendance costs and legal advice
• Employment practices liability – indemnity in respect of claims brought by employees
• Fidelity – coverage for loss of monies for which they are legally liable
• Negligence claims. There are claims arising from errors or incorrect advice
• Civil liability claims. These might result from their business activities
• Infringement of intellectual property rights. Claims for breaches of copyright or trademark
• Fines and penalties. Indemnity for penalties imposed for breaches of OH&S or environmental legislation
• Loss of documents. Indemnity for loss of documents for which they are legally responsible
• Run-off cover. Ongoing cover for a practice that has ceased operations, to cover claims that may arise at a later date
• Public relations expenses. Covers the cost of retaining a public relations consultant to protect their reputation, if damaged by a claim
• Investigations and enquiries. Costs associated with any official investigations and enquiries.

Make sure you read the PDS

2022 Finder research shows that 23% of Australians can't be bothered reading the PDS. Every insurer is different, it is important to read their PDS to make sure they cover you for what you need.

How to choose professional indemnity insurance for accountants

What is covered by a professional indemnity insurance policy for accountants will vary from insurer to insurer, but when comparing policies, there are certain areas you should pay special attention to. These include, but are not limited to:

• The level of excess and whether it is including or excluding costs
• Whether the policy covers work you have performed in the past if it is your first policy
• Ability to reinstate insured amount following a claim
• The geographical extent of the coverage (i.e. whether it is Australia only or worldwide)
• Whether the work undertaken is clearly defined
• The general wording of the policy and the particular exclusions that apply.

Be sure to read a policy's PDS for a more complete picture of what is and isn't included with the insurance.

How much does professional indemnity cost?

Finder ran some business insurance quotes for a NSW-based events management company with 5 employees. We found a professional indemnity policy may cost $191.81 per month. This was the average of 3 indicative quotes and was correct as of 29 June 2023.

But because professional indemnity insurance for accountants is industry-specific, you would be wise to look for an insurer or broker who specialises in accountancy insurance, or at least knows the specific requirements of your industry in detail.

Public liability insurance for accountants: If you have premises

When taking out professional indemnity insurance, it is normally advisable to take out public liability insurance as well. This is standard practice for any business that has clients who visit their premises or who visit clients at their own homes or premises.

What's covered?

Public liability insurance covers accountants against claims of personal injury to others or property damage incurred during the course of normal business activities.

A public liability insurance policy will normally cover your business, including any subsidiary companies you might own and your employees, as long as they are acting within the scope of their duties at the time of any incident.

What's not included?

Like all insurance, it has certain exclusions and will not cover events such as unlawful activity on the part of the insured, deliberate acts to cause damage or injury or personal injuries or property damage suffered by the insured.

What's the cost?

Finder ran some quotes and found a public liability policy with Vero may cost $40.75 per month (with a $500 policy excess) for a small NSW-based company. This indicative quote was correct as of 29 June 2023.

However, keep in mind that cost will vary due to multiple factors. Premiums are influenced by the nature of your business and its size, which is measured by revenue or number of employees. Again, a broker may be a smart next step.

Talk to a broker about professional indemnity insurance for accountants

Frequently asked questions

• How much cover do I need?

  For accountants, this will normally be dictated by government legislation pertaining to your industry, your membership of accounting associations and by the requirements of your clients.

• What is Civil Liability Indemnity?

  It indemnifies you for claims arising from strict liability where negligence is not involved.

• What is the difference between a costs-inclusive excess and a costs-exclusive excess?

  A Costs-inclusive excess means you must pay the excess towards the legal costs of defending the claim, while a costs-exclusive excess allows you to pay the excess towards the settlement of the claim.

• What is the retroactive date?

  It is the date after which any act, error or omission by the insured is covered by the professional indemnity insurance policy.