Recently we were working with a newer CPA. His current agent had written him a Business Owners Policy (BOP) and combined that with an additional policy for Tax Preparers and Bookkeeping Errors and Omissions Insurance for one policy through The Hartford. While these combination policies can be a cost effective way to add vital coverages they may not be appropriate for a CPA or an accounting practice.
This particular CPA did not do audit work, but did prepare compilations, did business planning and did business valuations which would also be normal practice areas that would be expected of a CPA. Given these practice areas The Hartford Tax Preparers and Bookkeeping Policy is likely not a good fit. While it does cover bookkeeping services and tax preparation, it specifically excludes compilations, business planning and business valuations per the following exclusion which is found on the ‘Professional Services Endorsement – Tax Preparers and Bookkeepers’ (Form SS 25 59 06 15):
Section III Exclusions Section
“or, based upon or arising from liability arising out of loss by anyone because of a loan or investment where reliance was made on any report, audit, balance sheet or other financial, accounting or related schedule, exhibit, statement or report that was prepared, signed or certified by any “insured”;”
Fortunately for this CPA, (s)he currently has no known claims that would arise because of the above mentioned areas of practice.
It is important when applying for accountant professional liability insurance coverage to make sure that accountant or CPA gets the coverage needed to cover their practice. Currently there are no known combination policies combing a BOP with errors and omissions coverage for a CPA accounting practice sold in the US.