Accountants’ Professional Liability Insurance
Professional liability protection for accountants and assurance for clients
As an accountant, you carry significant professional responsibility. An error in judgement, an omission or a negligent act can result in substantial financial losses for your clients and lead to claims against you as a professional adviser. That is why Accountants’ Professional Indemnity Insurance is an essential part of your professional setup.
What is professional liability insurance for accountants?
Professional liability insurance for accountants protects you and your practice against financial claims when a client or third party alleges that errors or omissions in your advice or auditing have caused a financial loss. The insurance covers both liability for damages and, subject to the insurer’s approval, reasonable costs incurred in determining the extent of liability.
Who should have professional liability insurance for accountants?
- Certified and registered accountants
- Accounting firms and practicing accountants (partners and employees)
- Companies providing audit and professional services, including through subcontractors.
This applies to any business or individual providing professional audit or advisory services where professional errors or omissions may result in financial claims against the firm or the individual accountant.
Compulsory Accountant’s Guarantee Included
The Accountants’ Professional Indemnity Insurance also includes the compulsory accountant’s guarantee. The guarantee protects clients and third parties against financial losses resulting from the improper use of entrusted funds and is a legal requirement for accountants handling such funds. Together, the Professional Indemnity Insurance and the guarantee constitute the complete compulsory insurance solution.
The guarantee covers:
- Financial losses resulting from the improper use of entrusted funds
- Cover up to the guarantee amount specified in the policy.
- Claims made and reported during the guarantee period.
What does professional liability insurance for accountants typically cover?
Liability for damages
Covers financial losses for third parties if errors or omissions in auditing work result in financial consequences. This may include errors in financial statements, reporting, or advisory services.
Investigation costs
The insurance covers reasonable costs incurred to determine whether liability exists, including legal advice and documentation.
Liability for subcontractors
Under certain conditions, errors by subcontractors engaged by the accountant may also be covered by the insurance.
Automatic coverage for new subsidiaries
New subsidiaries are automatically covered up to the specified limit.
Typical exclusions
- Personal injury and property damage
- Intentional or criminal acts
- Improper use of funds held in client accounts
- Liability exceeding standard Danish accountant responsibilities
- Fines, taxes, and punitive damages
- Employment law claims, discrimination, and employer liability
- Force majeure, war, terrorism, strikes, etc.
Optional Coverages:
The insurance can be extended with additional coverages, typically relevant for accounting firms with an increased risk profile:
- Damage to property in custody (e.g., client documents or items held by the accountant).
- Communication costs related to potential reputational damage
- Coverage for libel, slander, and defamation
- Court appearance costs
- Loss, damage, or destruction of documents including data (subject to an IT policy and daily backups).
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