Accountant errors and omissions insurance provokes a love/hate relationship with Accountants. Accountants should know what Accountant errors and omissions insurance coverage they have, when it covers them and when it does not. While getting it as cheaply as possible it is even more important to get the proper coverage. It is easy to get contradictory information depending on who you listen to.
Protect Your Assets
Accountant errors and omissions insurance protects the insured from themselves, their clients, and the people that work for them. The worst probable reason to buy insurance is when a client says that you need it.
Accountant errors and omissions insurance protects professionals when they make a mistake, have an error or omission, or fail to live up to professional standards. It is sleep insurance.
Mistakes Happen
So why do Accountants need Accountant malpractice insurance? Accountants are people and people make mistakes. As much as we think that we are right all the time, it turns out that all of us make mistakes and much more frequently than we care to admit. Mistakes are avoidable, but no one is 100% infallible.
Mistakes come from untrained staff using poor processes or procedures. Incorrect calendaring resulting in missing a key filing date or poor client intake are examples. Taking on a client matter without the needed experience can get an Accountant in quick trouble.
Reduce The Risk
It’s wise to reduce the loss potential. Proper risk management starts with education, changes in procedures, standardization, and constant review. Do not accept that claims will just happen take proper steps to minimize risk and mitigate them before they happen.
Risk Mitigation
Recognizing that the risk is real because people make mistakes, but you simply cannot by fiat declare that no mistakes will happen. Systems procedures and internal controls are essential for risk mitigation. Educate staff about the external threats such as cybercrime. Once you’ve done all this you still have exposure.
This is where accountant errors and omissions insurance comes into play. It is one piece of the needed protection puzzle to properly protect your assets. In addition to accountant errors and omissions insurance you also need cyber insurance, business owners coverage, and workers compensation at a bare minimum.
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Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080