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Professional Liability Protection for CPAs
Facing a professional liability lawsuit can be costly to a CPA. Therefore, it is essential for all accountants to have a comprehensive protection plan in place. When you work with an insurance provider that provides coverage specifically designed to meet the needs of a CPA, you can rest easy knowing that you are properly protected. At the same time, it is important to keep in mind that no two professional liability insurance plans are the same. In other words, you need to make sure the company is willing to work with you in order to make sure you have the coverage you need to meet your specific needs.
Although no two of these professional liability plans will be the same, there are some basics that should be included. These types of plans, which are also referred to as Errors & Omissions plans, should include coverage for the specific types of services you provide. Some examples of services that should be included in E & O coverage include…
- Audits
- Bookkeeping
- Compilations
- General business planning
- Litigation consulting
- Management advisory services
- Personal financial planning
- Reviews
- Tax planning and preparation
If you are a sole proprietor or if you employ other CPA’s in your firm, you also need to make sure the coverage provides protection for everyone in your firm. This can include full-time employees, part-time employees, per diem employees, non-professional employees, and even clerical staff.
Some providers of E and O policies will offer coverage that is specifically designed for different sized firms. For example, the offered through the AICPA offers one package for smaller firms that employ three or less people and have an annual revenue of $400,000 or less. If your firm is larger, they will provide you with the Premier Plan instead.
As you shop around for the liability plan that is best for you or for your firm, you need to consider a number of different factors. For example, this will have a limit on how much can be paid out per claim against you as well as how much can be paid out per year. Therefore, you want to make sure you get enough coverage to keep your business properly protected. Keep in mind, however, that higher limits will also result in higher premiums.You will also need to determine how much you are willing to pay for your deductibles. These can range anywhere from $0 to thousands of dollars. Again, the lower your deductibles, the more you can expect to pay on your premiums.
Since some of these professional liability policies will help pay the costs associated with your defense while others will not, you also need to look into this aspect of your policy. The benefit to this coverage is that you will not have to pay the expenses associated with the litigation that occurs when a claim is filed against you. Without this coverage, you may pay a great deal of money out of your own pocket in order to prove that you are innocent. Therefore, many CPAs prefer to have coverage for defense expenses included in their policies.
Another factor you will need to consider is including an extended claims reporting period. This type of coverage provides you with protection for any claims that are made against you during that period. Often, you can extend the period of coverage to one, three, or even five years beyond the standard period. If you are looking for a company to provide you with excellent insurance coverage, take a moment to fill out our simple online form. Once you have answered a few questions, we will send it to the appropriate companies and you will begin receiving great offers from reputable companies right away.
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