Why do professional accountants need Errors & Omissions coverage?

Published On: February 19th, 2021Categories: Commercial Insurance

Accountants play a critical role in our society. Being able to entrust professionals to ensure ledgers are balanced, accurate, and on-time allows our entire economic system to run efficiently and effectively. 

Slight changes in provincial and federal tax codes for individuals and businesses, amendments to generally accepted accounting principles, and ongoing digital transformation make it challenging for any accounting professional to be 100% accurate, 100% of the time. 

While being known for their close attention to detail, accountants are also human. Even the most detail-oriented of us make mistakes from time to time

Human error is what an Errors & Omissions (E&O) policy is for: to protect your livelihood and reputation due to human error. While there is no way to protect yourself entirely and your practice from a malpractice lawsuit, an E&O policy is there to reduce the financial impact on yourself and your operations drastically.

A well-designed E&O policy protects you and your practice from several potential claims, including:

Accounting errors Improper or incorrect tax advice Failure to maintain adequate safeguards or documentation
Data entry errors Failure to meet deadlines Failure to complete proper forms
Failure to perform appropriate peer review Failure to detect fraud

and more… 

Beyond covering risks, an E&O policy in good standing also improves how you advertise your accounting practice. Letting your clients know you have an Errors & Omissions policy in place allows you to proclaim that you will continue to provide the best possible service and expertise. Still, if something goes sideways, your practice is covered to protect your clients as well.

The policy protects legal defense costs, damage awards, settlements, and more.

Have questions or would like a second opinion on your professional liability coverage? Our team is happy to discuss and learn more about your business.

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Written by:

Nadine Chang

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