Due to the nature of the work they perform and the regulatory and compliance environment they operate in, accountants are often process driven and risk-averse by nature.
Minor accounting errors can cause havoc to a company’s finances, and it goes without saying that such errors can happen in every business – even in an accounting business. Even the most meticulous and studious of business owners can be distracted and thrown off their game by a worrying or unexpected incident.
Whether it’s a mistake you unwittingly made in tax calculations for a client or being targeted by cyber criminals hacking into your secure network, accountancy insurance* can help. You can ensure that your business is protected even in the face of certain catastrophes by reducing your business risk with the appropriate business insurance products.
As a qualified accountant, you are thorough in your work while also being very comfortable working with numbers, calculations, spreadsheets, financial projections, financial planning, and financial advising. You will very likely know the critical figures for your business (and your client’s businesses) like the back of your hand.
However, as with any other business there are risks involved in running your own accounting practice. You may be financially challenged by certain incidents that may completely halt your business growth, or worse. As such, when deciding how to protect your company, it can be important to consider risk-reducing measures, including business insurance that is tailored to the specific risks of your industry, such as accountancy insurance.
Accountancy insurance options for your business
As a hardworking qualified accountant, whether a Chartered Accountant (CA) or a Certified Public Accountant (CPA), you put tireless time, effort, and energy into staying current with the stringentlegal and regulatory requirements of the accounting profession.
You are thorough in your work while also being very comfortable working with figures, spreadsheets, and tasks related to financial planning and financial advising. You also know that your accounting practice can be exposed to risk – and that you want to actively reduce your exposure to risk.
The case for Professional Indemnity Insurance for accountants
Given the risks that accountants can face, Professional Indemnity insurance can form a key part of risk management strategies for accountants. Indeed, New Zealand-based CPAs are required to hold Professional Indemnity insurance with coverage of $1 million with an insurer licensed by the Reserve Bank of New Zealand.
For CA-designated accountants, a Certificate of Public Practice is a requirement under Chartered Accountants Australia and New Zealand Regulation CR2A to have the benefit of Professional Indemnity insurance.
How accountancy insurance can reduce risk for accountants
Here is just one example of when a Professional Indemnity insurance claim may be bought against an accounting practice in New Zealand. How easily could something like this happen to you and your accounting business?
Accountancy insurance claim example
An accounting business owner helps a client with auditing services having found out that their bookkeeper hid trust money and took funds from the trust. The client raises a claim against the bookkeeper, claiming that they failed to identify that funds were missing.
As a result, the client was awarded $50,000, and the insurer had to pay $40,000 in legal fees.
Accountancy insurance options for your business
To reduce the risk of accountancy insurance claims against your accounting firm, such as the claim mentioned above, you may consider reducing the risks to your accounting firm via the following types of business insurance.
- Professional Indemnity insurance: Business insurance designed to protect you and your business from any losses which may arise from any errors and omissions which may happen across a wide variety of accounting and tax services.
- Public Liability insurance: Provides cover for your accounting business against financial losses arising from claims of third-party accidental damage to property or injury (not covered by the ACC) resulting from you going about your business.
- Statutory Liability insurance: Business insurance that protects you, your business and your employees against unintentional breaches of New Zealand Acts of Parliament. It covers the costs of representation in investigations for alleged breaches affecting commercial businesses, as well as defence costs, and fines or penalties payable following a conviction.
- Cyber Liability insurance: Business insurance that reduces the risks associated with cyber crime and protects your business against both the legal costs and expenses related to cybercrime incidents.
Business insurance the BizCover way
Business insurance can become very complicated very quickly. But at BizCover NZ we make it our mission to ensure that business insurance is easy – and fast for small business owners.
BizCover NZ helps accounting small business owners throughout New Zealand to reduce the risks to their business via accountancy insurance made easy. Visit our accountancy insurance online portal to compare competitive quotes from leading insurers online, enjoy a drama-free business insurance experience, and get on with your day. If you would like to chat with our friendly team you can reach us on 0800 249 268.
*This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. © 2023 BizCover Pty Limited. BizCover Limited is owned by BizCover Pty Ltd.
*The provision of the claims examples are for illustrative purposes only and should not be seen as an indication as to how any potential claim will be assessed or accepted. Coverage for claims on the policy will be determined by the insurer, not BizCover.