Accountancy insurance

What is accountancy insurance?

Accountancy insurance is business insurance for accountants. It contains elements important to this specific profession, like professional indemnity and public liability cover.

What insurance does an accountant need?

The most important type of insurance for accountants is professional indemnity insurance. This cover is vital to anyone who gives advice or offers professional services to another person or business. It covers you in case you make a mistake or miscalculation that harms your client financially.

Another important type of cover is cyber insurance. These days, most accountants keep their records on a computer or in the cloud, which leaves them vulnerable to data breaches. This can happen through someone hacking your computer, or even simply someone stealing your device. Having cyber cover protects you in case action is taken against you following a data breach.

If you employ staff, you are legally required to take out employers’ liability insurance.

Other elements you might wish to add to your accountancy insurance include cover for legal expenses, buildings and contents cover, and public liability insurance if you have your own premises.

Why do accountants need insurance?

If you’re licensed to practise accountancy by ACCA, AAT, ICAEW, ICAS or CIMA, then having professional indemnity insurance is likely to be a requirement for you (the exact specification needed will vary according to your licence).

If you’re not chartered, then insurance is not mandatory (with the exception of employers’ liability insurance, which is a legal requirement for anyone who employs staff). That said, it is highly recommended having at least professional liability insurance and cyber insurance in place, as claims resulting from these types of incidents can be financially devastating without cover.

What does accountancy insurance cover?

Policy specifications will vary by insurer and depend on the level of cover you choose to suit your needs, but business insurance for accountants can include the following:

• Cyber liability insurance. Chances are you keep your files and data online, or at least stored on a computer (even if you have hard copies in your office). Unfortunately, this leaves you vulnerable to data breaches from someone hacking into your system or simply stealing your computer and accessing the data directly. Cyber insurance protects you in case this happens and a claim is brought against you by clients whose data was compromised, and even helps with ransom demands from hackers. It also helps protect the data, to reduce the chance of a breach happening in the first place.
• Professional indemnity insurance. Mistakes happen even to the most skilled accountants. Indemnity insurance covers you against claims of negligence by clients if, for example, you make a miscalculation and it ends up costing your client money. With this cover, you will get help with legal costs and compensation payments, up to the limit of your policy (this can vary from a few thousand pounds to several millions).
• Public liability insurance. If you have your own premises, you should consider taking out public liability cover. This type of policy protects you in case a member of the public is injured or their property is damaged and your business is legally liable. For example, if someone trips and injures themselves while visiting your office.
• Buildings and contents insurance. If you have your own office, this type of cover is also recommended. Buildings insurance protects your building (including fixtures and fittings) against things like fire and flood damage. If you rent your premises, this might be covered by the landlord, but make sure to check with them what is and isn’t included. Business contents insurance covers you if the items inside your office (like furniture, computers and other equipment) are damaged, lost or stolen. If you travel to see clients, look for contents insurance that includes cover for your items away from your premises. Note that if you run your business from home, you are unlikely to be covered under your regular home insurance policy. Find out more in our complete guide to home insurance cover when you work from home.
• Employers’ liability insurance. If you employ staff, you are legally required to take out employers’ liability insurance, to protect both your crew and yourself in case legal action is taken against you.

Other types of cover you might wish to take out include:

• Legal expenses. While liability compensation payouts can run to millions, other costs involved in a court case can also be a serious burden. Legal expenses cover can help make the whole experience less stressful.
• Personal accident. Personal accident cover helps out with lost income, medical costs and hospitalisation benefit in case of serious injury or even death (even if the incident did not happen while you were at work).

Common claims examples

• Mistake in calculation. Even if you have a long list of qualifications and years of experience as an accountant, everyone can make mistakes sometimes. When it comes to handling people’s finances, even a small miscalculation can have serious consequences for your clients. Having professional indemnity insurance in place can help with legal costs and any compensation payments you might have to pay if action is taken against you.
• Targeted by hackers. Cyber crime is on the rise and hackers are always finding new ways of getting hold of people’s financial information. Cyber insurance helps to protect the data stored on your devices and, in case it is stolen by a hacker, can help with legal expenses and compensation should action be taken against you, and even pays the ransom money if the hackers demand that in order to return the stolen information.
• Fire damage. If your office is damaged by a fire, having business contents insurance will help replace the items inside, such as furniture and computer equipment. Any damage to the building itself (including fixtures and fittings) will require buildings cover. Note that if your office is inside your own home, your regular home insurance is unlikely to cover items relating to your business.

Frequently asked questions

• What level of accountancy insurance do I need?

  This will depend on the type of licence you practise under and the needs of your business (like whether you have your own dedicated premises and whether you employ staff).

  Getting professional indemnity cover and cyber insurance is highly recommended to all accountants. If you work with high net worth or high profile clients, consider choosing the top level of cover on offer.

  Professional indemnity cover is usually a requirement if you’re licensed by ACCA, AAT, ICAEW, ICAS or CIMA, and the level of cover you need to take out is determined by the licensing body.

• How much is accountancy insurance?

  The cost of insurance is an individual thing and is determined by a range of personal factors relating to your business. This includes your annual income and turnover.

  Professional indemnity insurance is usually the most expensive part of accountancy insurance. On top of that, you should be able to add things like legal expenses, cyber insurance, public liability and contents insurance for an additional premium.

• What is the average insurance claim for accountants?

  According to our partner, Simply Business, the average insurance claim for accountants is £5,250. This is based on data from 21 November 2018 – 20 November 2019.