Such is the irony that a profession which is dedicated towards curtailing the financial risks is full of risks. As a chartered accountant, your work involves ensuring that your company’s health is in a good state, you can’t ignore the risks which you may have to face while discharging your professional duties. Here, Chartered Accountant Indemnity Insurance, which is also called errors and omissions insurance policy, can play an important role.
Professional Risks
As a chartered accountant, you are imparting advice to clients, which may comprise of one or more of the following tasks:
- Taxation
- Accounts preparation, bookkeeping & accounts management
- Audit
- Business valuations
- Forensic accounting
- IT consultancy
- Migration services
- Investment advice
Unfortunately, claims or potential claims against chartered accountants often arise with the finest of practitioners as well. If your client incurs losses, that client will look for ways to recoup costs, irrespective of the fact how strong your work was.
Even when a chartered accountant has all the resources, a mere frivolous claim can be a massive distraction. One of the unavoidable risks that a chartered accountant can face is the reputational risk and the burden that is followed with the claim. Complying with the client’s need is necessary. The last thing that any chartered accountant wants is a lawsuit over their head and worrying that whether they have proper financial resources to handle the situation or not. In most of the cases, accountancy lawsuits are not only costly, but they are protracted as well. Lawsuits can arise from a myriad of risks, like
- Breach of professional duty
- Alleged errors
- Professional negligence
- Performance-related claims
- Misinterpreted statements
- Incorrect or untimely tax returns
- Conflict of interest
- Incorrect tax or statutory return preparation
- Invasion of privacy and breach of confidentiality
- Employee dishonesty
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Though, a chartered accountant needs to be diligent and careful while performing duties, some errors are bound to happen. In the event of professional negligence or error, the Chartered Accountant Indemnity Insurance will help you. The policy covers the chartered accountant for a breach of professional duty, and it can be extended to cover:
- Defamation
- Misleading and deceptive conduct
- Losses or damages arise from fraud
- Defense costs associated with claims
- Breach of intellectual property rights
By opting for a Chartered Accountant Indemnity Insurance, a chartered accountant can save his/her valuable time in the case of an allegation. Moreover, the policy ensures the peace of mind as the professional knows that the insurer will come forward to cover in case of unfortunate events.
Points to Note
The insurer will settle only those claims which are made when the policy is active. It means, you must be insured both at the time of the loss and when a claim is filed. Moreover, Chartered Accountant Indemnity Insurance will not cover all the events, and therefore, it is essential to have a complete understanding of the exclusions.
As the policyholder, it is necessary to give correct information about your business at the time of buying the policy. If the insurer finds out that the incorrect information is submitted in the policy document, it can refuse to settle the claim.
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Minimising Chartered Accountant Indemnity Insurance Premium Quotes
In the insurance field, premiums depend on the risk that is driven by the revenue of the accountancy firm, its location, number of practitioners, area of practice, previous claims and clientele base. Premiums would be much higher for some chartered accountants. For instance, the chartered accountant firm in Delhi would pay a higher insurance premium than the one situated in Agra.
It may happen mainly because of the increased likelihood of claims along with the clientele base from a statistical point. It means, different insurance companies adopt different rating models and as the policyholder, it is necessary for you to shop around to find the right policy.
Undeniably, every professional work towards the welfare of its client. However, as a human being, you are bound to make a mistake, and therefore, if you have dedicated your career towards curtailing the risk that other people face, make sure to take adequate steps to lower your risks with the help of Chartered Accountant Indemnity Insurance.