Types of Claims Liability Insurance May Cover
You may think of your accountants professional liability coverage as protection against errors and omissions. That is an accurate assessment of your coverage, but it is likely an incomplete one as well.
There are many scenarios where your professional liability can come in handy.
A data breach can open an accounting firm up to legal action. If clients’ files are compromised and you fail to handle the issue efficiently within the guidelines of the breach laws in every state you service, you could be sued and asked to pay damages. A case of fraud is damaging enough by itself, but clients tend to hold their accountants to high standards. They may file a claim against you as the result of losing their trust. In instances where you have a fiduciary responsibility to your client, such as a transfer of estate holdings, the stakes are also high. If your clients believe you have mishandled their business in any way, they may sue.
These are just a few situations in which your accountants professional liability insurance is necessary. Without it, you would be covering the legal costs of defending yourself against every claim brought against you. With a solid policy, your legal fees and any damages awarded to the plaintiff are covered.