What is accountancy insurance?
The term ‘accountancy insurance’ can be a bit misleading. Rather than being a type of insurance itself, it instead refers to the various policies you may want to consider if you work as an accountant or bookkeeper.
This means, if you are a sole trader, your definition of accountancy insurance may be slightly different to someone who owns their own accountancy firm with multiple employees.
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Professional indemnity insurance for accountants
Due to the advisory nature of accountancy, professional indemnity insurance for accountants is probably the most important policy within your package.
It is designed to cover the legal fees and compensation costs related to claims of professional negligence or bad advice that causes your client a financial loss. This could include a mistake you have made in your accounting, or a course of action you recommended that ends up costing your client money.
Unlike in many other roles, professional indemnity insurance can be a requirement for accountants. Not due to laws set out by the government, but because of the membership rules of the professional bodies you may need to join. Each body may also dictate the minimum level of coverage required, based on your income or trade status.
Professional bodies that require you to take out professional indemnity insurance include, but are not limited to:
- Association of Accounting Technicians (AAT)
- Association of Chartered Certified Accountants (ACCA)
- Chartered Institute of Management Accountants (CIMA)
- Institute of Chartered Accountants in England and Wales (ICAEW)
- Institute of Chartered Accountants of Scotland (ICAS)
Before purchasing any cover you should familiarise yourself with the individual requirements for the one that relates to you. Some bodies may also include rules on who you can buy insurance from and may have a list of approved insurers.
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Other types of insurance for accountants
There are a number of other types of business insurance you might want to consider as an accountant.
Public liability insurance can protect you if you accidentally injure a third party, or damage their property, during your regular business activities.
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As an accountant, your livelihood is likely to rely on access to a laptop or computer. The right level of equipment insurance can help get your items replaced if they were lost, stolen or accidentally damaged.
Cyber and data insurance, meanwhile, can cover the costs if confidential data was lost or shared, and a client makes a claim against you.
If you have a business premises, you may want to consider business buildings and contents insurance, which can be purchased separately or in tandem.
You will also legally need to take out an employers’ liability insurance policy worth at least £5 million if you employ anyone that isn’t a family member or based abroad.
