Accountants that choose to go without errors & omissions insurance believe that because they work for a small firm and maintain close relationships with their regular clients, that they are immune to claims. Other accountants believe that the chances of them facing a claim aren’t great enough for them to purchase an Accountants Errors & Omissions insurance policy. The flaw in this logic is that small firm accountants are just as likely to have an errors & omissions claim as some of their more high-profile peers. Many small firm accountants believe that they will have to pay just as much as their large firm peers.
Accountant Errors & Omissions Insurance costs vary widely. No two accountants are going to pay the same for their coverage. Accountant Errors & Omissions is written for the entity. The cost is based on a per accountant basis and firm revenue. The key rate factors are:
1. Number of Accountants and how long they have been with the firm
2. Firm Revenue
3. Claims History
4. Disciplinary History
5. Areas of practice
6. Number of years with continuous claims made coverage
7. Liability Limits
8. Deductible options
The costs for different practice areas can be 5 to 10 times from one area of practice to another. Tax work, bookkeeping and compilations generally are on the lowest end of the spectrum; with audits and business Valuations being on the high end of costs paid.
Premiums for an accountant without insurance coverage can start out for as little as $150 to $500 for the 1st year of coverage. Expect premiums to rise over the 1st 5 to 7 years until the accountant is fully rated. The average costs for most fully rated accountant should be $800 to $2000 per year depending upon limits per accountant and firm revenue. Accountants that practice in the higher risk areas can expect to pay around $2000 to $3000 per year per accountant. This varies widely by state and location in the state based on the carrier’s past claims experience in that state. Firms with claims and disciplinary history can easily see these numbers double.
For most accountants this cost is small versus the risk to one’s assets. For Accountant Errors & Omissions Insurance is Sleep Insurance.
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Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080