Professional indemnity insurance for tax and BAS agents
Without the right insurance, tax agents are at risk losing their job and more. Here's why.
Not only is having professional indemnity insurance a sensible financial decision for any Tax and BAS Agents, it's also a legal requirement.
In a job that deals with large amounts of someone else's money, it's important that a Tax and BAS agent has the right cover. Your professionalism and experience in the industry isn't enough to protect you should something go wrong. After all, in such a high-pressure, mistakes can happen.
What are the risks?
- Incorrect advice, errors or mistakes on financial statements.
- Late lodgement of documentation.
- Failure to provide promised services.
- Liable for a client's losses.
Your income (among other factors) will determine how much cover you need, so it's important you do the research before committing to a specific insurer. Simply click "Get quotes online" or speak to a broker to get a quote and advice on how much your practice needs.
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Why do Tax and BAS Agents need professional indemnity insurance?
In accordance with the Tax Agent Services Act - 2009, all tax and BAS agents in Australia are required to have at least minimal level Professional Indemnity insurance. The law requires these professionals to have professional indemnity and if a tax agent does not have this policy they are considered to be in breach of the Code of Professional Conduct.
What is the Code of Professional Conduct?
The Code of Professional Conduct otherwise known as Code outlines proper conduct for agents when handling clients and this includes having honest, integrity, confidentiality, independence and competence amongst others. A client could therefore claim that one or more of these core principles were not used leading to financial claims.
Where professional indemnity comes in
With Professional Indemnity Insurance, you don’t have to worry about the direct financial implications of such a claim since your insurance policy will cover the claim.
Professional Indemnity cover ensures you are protected from legal costs which arise from seeking and undertaking legal defence, investigations and other costs that may be related to the Professional Indemnity claim. Most professional indemnity claims are filed against negligent behaviour or actions by the professional, misleading advice and deceptive advice and actions.
How can it cover tax and BAS agents?
Professional Indemnity insurance cover for tax and BAS agents or tax practitioners protects them from legal claims due to errors and omission, losses due to the practitioner’s actions or their financial advice and services.
How to choose professional indemnity insurance for Tax and BAS Agents
Be sure to ask the following questions:
- How much cover do I need? In most cases, it’s the professional who identifies the cover appropriate for their work. You therefore need to have a realistic point of view on the potential legal costs and damages you may encounter.
- How much will this cover cost me? Different insurance providers will have their different policies and these come with different rates. Find out what the costs are and compare them with what other providers are offering.
- Does the policy cover all aspects of my profession? You need to safeguard your interests by ensuring that the policy covers most of the important risk factors if not all of them. Some policies will not cover certain duties undertaken by tax and BAS agents.
- When is the policy effective? You want a policy that gives you immediate coverage.
- What are the jurisdictional limits? You need a Professional Indemnity insurance policy that covers all areas you provide tax services.
Do Tax and BAS agents need public liability cover?
Public liability insurance ensures that you are protected against legal claims from third party offenses. If for example a client is injured while at your office or an employee revealed private data, the client involved has the right to sue you. Such a case would take a lot of time and money and this is where your public liability cover comes in. The insurance policy covers various circumstances and risks including damages and legal proceedings giving you peace of mind.
With public liability insurance, tax agents do not have to worry about the expenses that come with hiring legal defence or rulings that require damages to be paid. The insurance policy covers such occurrences. In other words, your finances and personal assets will be unaffected by the legal claim. You also get to preserve your reputation as a tax consultant. Sometimes, the inevitable happens as you carry out your normal duties and these could be in form of accidents and mishaps that lead to property damage or personal injuries. You can prepare for the unexpected by getting a public liability insurance cover for tax agents.
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Frequently Asked Questions About Professional Indemnity Insurance
Q. What is the importance of a Professional Indemnity cover for tax agents?
- A. Professional Indemnity covers help insure tax agents against legal claims alleging their negligence, errors and/or omission. Mistakes happen and when they do, the client may take legal action which could see you lose your good standing and your finances as well.
Q. Is it a must for tax agents to have Professional Indemnity covers?
- A. Yes. Australian law requires that all practicing tax agents who are paid for the services they render have a Professional Indemnity cover. Not having a Professional Indemnity cover could see your registration terminated.
Q. How can I get a good rate on my Professional Indemnity cover?
- A. One of the best ways to get good rates on your Professional Indemnity cover is to hire an insurance broker. Insurance brokers understand the market and they are in a better situation to negotiate a better deal on your behalf. They also remove the hassle that comes with getting different quotes when trying to get a better rate. However they are paid on commission.
Q. What is not covered by Professional Indemnity insurance?
- A. Different insurance providers will have their different exclusions. Some of the things that are not covered in your policy include claims made after canceling your policy. Professional Indemnity insurance also does not cover fraudulent, dishonest and criminal acts which were intentionally engaged in by the policyholder.
Q. How much does Professional Indemnity insurance cost?
- A. The cost of Professional Indemnity insurance covers for tax agents is mainly influenced by government legislation. Other factors are considered and these include the highest risk potential, policy limit, possible legal costs and much more.
Q. How can I compare different Professional Indemnity insurance providers?
- A. When comparing Professional Indemnity insurance providers, some of the factors you need to look out for are limits on liability, policy exclusions, cover features, claim conditions stipulated by the insurance providers, the cooling off period and policy extensions. Its also worth reviewing reviews from recognised industry bodies and from previous customers that have undergone claims with the provider in the past.
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Professional Indemnity insurance for BAS and tax agents gives these professionals the much needed financial protection against financial loss and reputation damage due to alleged error or omission and professional neglect.
In Australia, tax professionals are required by law to have Professional Indemnity covers in accordance with the Tax Agent Services Act of 2009.
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