Company insurance is intended to safeguard the financial assets of a business owner and is a crucial investment for an accountant.
This article will discuss the primary insurance coverage for accountants, general liability insurance, as well as additional policies that are appropriate for this industry.
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Accountants’ General Liability Insurance
Every firm, regardless of sector, has risks that should be insured. General liability insurance is the most frequent and comprehensive form of coverage that company owners purchase.
General liability insurance covers the following risks:
Physical harm
Damage to property
Medical expenses
Legal defence and decision
Personal and commercial harm
While general liability insurance is not legally needed for companies, operating without it is exceedingly dangerous. If your company is sued, you might face costs in the hundreds of thousands of dollars (or more). The only way to avoid this sort of catastrophe from destroying your organisation is to have an adequate general liability insurance coverage in place to assist pay for these losses.
COMMON SITUATIONS FOR WHICH GENERAL LIABILITY INSURANCE MAY PROVIDE COVERAGE FOR AN ACCOUNTANT
Example 1: A customer comes into the office to review their tax returns and requests a cup of hot tea during the discussion. When delivering the hot beverage, your employee inadvertently spills it on the customer, causing serious burns. The subsequent medical expenditures will most likely be covered by general liability insurance.
Example 2: One of your accountants overlooks a significant deduction for a customer, causing them to overpay their taxes by thousands of dollars. General liability insurance will very certainly assist you in settling any subsequent lawsuits or reputational damage.
Example 3: A customer sues your company because they feel your marketing is deceptive. General liability insurance will most likely cover the expense of defending oneself or reaching an out-of-court settlement.
Of course, this is not an entire list of risks covered by a general liability insurance policy, and certain situations may result in a specific peril not being covered. To minimise coverage gaps, it’s always better to speak with your agent about the terms of your policy.
General Liability Insurance Cost
Accountants in the United States typically pay between $400 and $700 per year for $1 million in general liability coverage.
The cost of your coverage will be determined by a number of variables. Among them are your:
Location
Deductible
Employees’ number
Per-occurrence restriction
The overall aggregate limit
You may be able to get general liability insurance at a lower cost if you buy it as part of a business owner’s policy (BOP) rather than as a separate policy. A business interruption policy (BOP) is a more complete option that covers numerous types of coverage, such as business interruption and property insurance.
Accountants Require Other Types of Coverage
While general liability insurance is the most crucial, there are various different types of coverage to be aware of. Other forms of insurance that all accountants should have are as follows:
Insurance for Professional Liability
Accountants provide a lot of advise to their customers, and this coverage goes beyond basic liability insurance to aid organisations when a particularly severe error occurs.
Insurance for Real Estate
To operate, an accounting firm often depends on the space and equipment it has. A single storm, robbery, or fire might endanger its existence. In the case of damage or destruction, property insurance will most likely cover the grounds, physical structure, and company equipment.
Accountants May Require Various Types of Insurance
In addition to the policies listed above, your accountant may need other forms of coverage based on particular elements of your activities. Some of them may not apply to you, so be sure to ask your agent whether policies are appropriate for your company.
Insurance for Home-Based Businesses
This insurance will cover any damage or destruction to the spaces used for business by accountants who operate from home. So, if the accountant is deducting the cost of their mortgage for tax reasons, they will very certainly want home-based insurance to cover typical disasters like fire, theft, or water.
Umbrella Insurance for Businesses
Commercial umbrella insurance is intended to cover costs in the event of a very expensive legal lawsuit. For example, if a customer believes you lost them millions of dollars due to overly cautious financial predictions. The lawsuit goes on for a year, resulting in tens of thousands of dollars in legal fees. When the limitations of a company’s general liability or professional liability insurance coverage are reached, commercial umbrella insurance kicks in.
Additional Security Measures for Your Company
Although investing in company insurance is simple (and necessary), it should not be your first line of defence. Yes, insurance will reimburse your company for cash losses incurred as a result of an occurrence, but it is much preferable to avoid losses altogether.
With this in mind, here are a few steps you can take to better secure your company:
Make use of legally binding contracts and other business agreements. (We provide free templates for several of the most often used legal forms.)
To safeguard your personal assets, form a limited liability company (LLC) or a corporation. (To discover how to incorporate an LLC or company in your state, see our step-by-step tutorials.)
Keep your company licences up to date.
Streamline the internal procedures of your company. This will eliminate unneeded variables from routine activities and establish a secure, consistent environment in which to do business.
If your company is an LLC, you should check into LLC insurance.