Compare Professional Indemnity Insurance for Tax Agents
Professional indemnity insurance is designed to give professionals insurance coverage against legal claims and costs which may arise from their actions, breach of duty, errors and omissions while on duty. This insurance cover is essential especially for tax and BAS agents. According to the 2009 Tax Agent Services Act (TASA), registered tax, BAS and financial advisers need Professional Indemnity insurance failure to which they may be breaching the Code of Professional Conduct (Code). Tax agents that neglect to take out professional indemnity insurance risk having their license terminated.
Professional Indemnity insurance cover for tax and BAS agents or tax practitioners as they are collectively referred to protects them from legal claims due to errors and omission, losses due to the practitioner’s actions or their financial advice and services. In actuality, this offers compensation for clients. Professional Indemnity insurance defends you from professional conduct claims that not only damage your reputation but cost you time and money in legal expenses; it doesn’t matter whether or not the allegations are founded. A Professional Indemnity insurance policy not only provides coverage as a tax professional from legal claims, it also covers the cost of defending yourself legally leaving you assured that your good reputation and assets are protected. Professional Indemnity insurance does not provide coverage for criminal prosecution along with other offenses recognised as criminal acts. If you offer tax services as a tax consultant or agent, this is one insurance policy that you cannot do without.
If you are ready to speak with a consultant about different business insurance options available, simply enter your details in the form. Keep reading if you want to learn more about the different types of cover available.
- Why do tax and BAS agents need professional indemnity insurance?
- How to choose professional indemnity insurance for tax and BAS agents
- Do tax and BAS agents need Public liability cover?
- Frequently asked questions about professional indemnity insurance
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. Such an offense would come with dire consequences especially professionally since it could leave to revoking the tax agent’s registration. The first reason why you need insurance is therefore because it is required by law. Besides the fact that this is a legal requirement in your profession, professional indemnity insurance for tax and BAS agents is still an important undertaking. Professional Indemnity cover is actually taken in the best interest of the tax professional since it offer a safety net against claims made by clients due to errors, omissions and other similar oversights.
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.
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. 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. Not all tax and BAS agents need to have the Professional Indemnity insurance. While it is a government directive to have one, there is a loophole which allows agents who do not charge fees or receive some form of reward for their services not to bear the cover. This however does not apply to many professionals which mean that most tax agents will need to get their Professional Indemnity cover.Back to top
How to Choose Professional Indemnity Insurance for Tax and BAS Agents
Why would you need to have a Professional Indemnity cover for BAS agents? It is not only time consuming to defend yourself against professional conduct claims but quite costly as well. Also remember that your reputation as a professional is on the line which means that you would need the best legal representation. If you were to be held liable for your actions, the implications affect your finances and your career as well. This cover therefore safeguards your interests and the actions you take while on duty allowing you to conduct your tax services with complete confidence. This insurance policy will indemnify you as a tax or BAS agent from legal claims made against your professional actions or lack of actions.
Mistakes happen and these may affect the quality of the tax services and advice you offer. While you can try your best to avoid errors in the provision of your services, mistakes can and do still occur and it is very easy for clients to sue you for negligence. Consider the implications of a lawsuit on your reputation, personal assets and finances. A lot of things could go wrong leading to a situation where you are forced to pay for damages. It could be breach of confidence due to a gossipy email sent by your assistant or system failures leading to loss of client data. Whatever the case, it always helps to know that you have a cover that protects you from occurrences such as these as they are beyond your control. When you have a lawsuit filed against you, this literally impacts your integrity as a tax agent.Back to top
Questions Tax and BAS agents should ask about Professional Indemnity Insurance
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.Back to top
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.Back to top
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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.