Background - An accountant failed to inform their client that their income had exceeded the VAT threshold and they should, therefore, register for VAT.
As a result, the client claimed against the accountant for the eventual liability.
| Annual Fee Income Band (GBP) | Minimum Limit per Claim | Minimum Aggregate Limit | Excess/Deductible Guideline |
|---|---|---|---|
| Up to 100,000 | 100,000 | 1,500,000 | 1% of income or 2,500 |
| 100,001 - 500,000 | 500,000 | 3,000,000 | 1.5% of income |
| 500,001 - 2,000,000 | 1,000,000 | 5,000,000 | 0.75% of income |
| Over 2,000,000 | 2,000,000 | 10,000,000 | Negotiated, based on risk |
Background - A client purchased a company which turned out to be a bad investment. They claimed their accountants had been involved in the due diligence process and failed to warn them of certain fundamental issues.
We have a dedicated team looking after the PI interests of many Accountancy firms throughout the UK. Fast service quotations normally within 24 - 48 hours Dedicated Account Manager your own central point of contact High client retention 94% of clients choose to renew with us year on year. Tailored insurance designed to fit the firm Policy wordings vary, but certain protections are core to professional indemnity insurance for Accountants. Cover for the financial compensation you have to pay if you made an error, omission or gave negligent advice in the course of your professional services. Your legal defence costs including solicitors, counsel, experts and court fees.
Cover bet top uk sports betting sites for breach of professional duty or unintentional breach of contract where this leads to a claim for financial loss against you. Professional indemnity claims against Accountants range from hundreds to millions of pounds. Claims can arise from many different scenarios but key areas of risk include ; Misleading or inaccurate advice such as poor tax advice, recommendations or advice on business valuations that leads to quantifiable financial losses. Failure to detect fraud as an auditor to a company. Loss of documents or data in the accountant’s care including the costs of restoring or replacing them and associated client loss where covered.
Certain civil liabilities such as defamation, unintentional breach of confidentiality or intellectual property rights, in the course of providing professional services. Professional indemnity insurance for an Accounting firm is best obtained through a specialist broker. A good broker will reduce the annual premium cost as well as providing invaluable advice and support. Unless you have the necessary insurance expertise, beware of buying your cover online. Buying a policy online may not give you the cover you actually require. Background - An accountancy firm was recommending a local firm of independent financial advisers (IFA) to their clients, for bet online betting app which they were receiving referral commissions.
The IFA went into liquidation and it soon became apparent that poor product advice had been given.
Various clients then claimed against the accountant for having referred them to the IFA. The current PI insurance market for Accountants continues to soften and there are now many different options available, often offering more cover at a lower cost. Accountants' professional indemnity insurance is estimated to be worth in the region of £100 million of premium income to the insurance market. This is paid for by the 20,000 firms practising in the UK. Firms vary dramatically in size – from sole practitioners through to huge global practices. There are approximately 60 insurers currently underwriting in the market. Market distribution is heavily dominated by brokers who arrange PII on behalf of most firms, with only a relatively small number of firms arranging cover direct with insurers. Like any market, you'll find the good, bad and ugly so it's important to use a good broker to find the cover and premium which best suits your business and your attitude to risk.
| Insurer Category | Acceptability for ACCA | Minimum Financial Rating (e.g., S&P) | Policy Requirements |
|---|---|---|---|
| UK Admitted Insurer | Fully Acceptable | A- | Must meet ACCA minimums |
| EEA Insurer (Passporting) | Acceptable | A- | Must meet ACCA minimums |
| Lloyd's of London Syndicate | Acceptable | Secure Syndicate | Must meet ACCA minimums |
| Non-EEA Insurer | Case-by-case approval | A | Stricter review, may need reinsurance |
The rating of an accountancy firm or any professional indemnity risk is a complex process.
Accountants were one of the first professions to make professional indemnity insurance compulsory for regulated firms. Today, it's a large insurance market with many insurers battling for market share. It's important to have some understanding of how the market works to be able to make an informed decision on which product is best for your firm. Does creating the right impression really matter? Professional indemnity insurance for accountants is usually purchased from a specialist broker.
A good broker lowers the premium cost as well as providing valuable advice and support throughout the insurance period, especially on claims. We have provided professional indemnity insurance quotations to hundreds of accountancy firms, from new starts to multi million pound businesses. Rates for Accountants PI insurance typically range between .3% and 1.5% of fee income, depending on the usual risk factors and market competition. Rates can also be higher or lower than this depending on the work undertaken, the claims history etc. Rates are discounted for new start firms as there is no history or legacy to insure.
You should also bear in mind that minimum premiums will also apply which can vary considerably between insurers. For example, a minimum premium for an accountant could be £ 100 or £ 1,000 depending on the insurer selected. The minimum premium is the insurance companies starting premium for insuring any risk. If you stop trading you may be required by your regulator to carry run-off insurance which is usually a multiple of the annual premium. It's not good practice to buy accountants' professional indemnity insurance as a 'commodity' purchased only on its price. Underwriters need to be highly skilled and require a significant amount of information to enable them to provide a quotation which accurately reflects the risk they are pricing. Premiums are calculated based on many factors which will include: The number of partners or directors to staff ratios To assess the risk the underwriter will require a fully completed proposal form which they will consider in detail.
They will also look at the firm’s website or they may even look deeper online into a firm’s background. Risk presentation is more important than you might think.
However good the policy wording is, professional indemnity is commercial insurance and coverage disputes can still occur. Use a specialist broker to get some good advice. The insurance 'rate' is the percentage of fee income or turnover an underwriter requires to provide the insurance cover. It is decided upon by using the usual risk factors including type of profession (accountancy, architecture, surveyor etc), the breakdown of activities, any prior claims etc. This is then applied as a percentage to a firms rateable fee income or turnover. The underwriter is assessing the professionalism and quality of your firm and if the information is badly presented, it may influence their judgement and the premium they offer or they may even decline to quote. Reading the insurance policy is an obvious necessity for any policyholder and yet it's surprising how often businesses find that they claim on an insurance policy and then discover the cover isn't as they expected because they didn't read their policy.
Make sure to compare the coverage and exclusions of each policy. Review Policy Terms: Carefully read through the policy details to ensure it covers all the essential risks specific to your role as an ACCA tutor. This includes checking for coverage on legal costs, settlements, and any other relevant areas. Understanding the factors that influence the cost of ACCA tutor insurance is essential after determining the right coverage for your profession. The cost of professional indemnity insurance for an ACCA tutor depends on several key elements.
Firstly, the level of coverage you need directly affects the premiums. Tutors with larger client bases or those offering specialised services may face higher costs. Secondly, your experience and claims history play a significant role; a clean record can help lower your premiums. Thirdly, the location and regulatory environment also impact costs. Lastly, the reputation of the insurance provider and the specifics of their policy terms, such as deductibles and exclusions, are important considerations.
Evaluating these factors ensures that ACCA tutors secure appropriate and cost-effective professional indemnity insurance. Live support for students and tutors - the quickest way to talk with us. Since 2011 we have been arranging tailored professional indemnity insurance for Accountants. We have a specialist knowledge of the professional indemnity market and offer a range of services to help established and new-start Accountants obtain their cover quickly and at a competitive premium. With at least 45 insurance companies on the current ICAEW list of Participating Insurers there's plenty of competition available, which is why thousands of Accountancy firms already arrange their professional indemnity insurance with these companies. Firms must always ensure that they have read and understand completely the terms of their professional indemnity policy. If any points are unclear, you should clarify these points with your broker.
For example, if an underwriter decide they require a rate of 0.5% to insure an accountancy firm with a fee income of £ 500,000, the annual premium quoted will be £ 2,500 (net of insurance tax). There are many different scenarios where an accountancy firm can find themselves needing to claim on their professional indemnity insurance. Some are obvious but others are not, so here are a few real examples; Background - A firm of independent accountants were the auditors to an import company. The company was providing false information for the purpose of raising money from banks. A fraud was committed and the banks sued the auditors for failing to detect the fraud. Professional indemnity insurance operates on a 'claims made' basis which means that it is the policy in force when the claim is made that responds, not the policy in force at the time when the work leading to the claim was carried out (unless the two happen to be the same). The retroactive date within the policy is the date which determines how far back in time the insurer will respond to claims arising from past work.
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