Professional liability insurance, sometimes known as errors and omissions, protects professionals from financial loss due to lawsuits taken against them by clients. Understanding what this insurance is and why it is necessary are two different things. Why is accountant professional liability insurance, or liability insurance for any profession, necessary?
Clients and customers expect an extensive knowledge when they go to professionals. They trust that the accountant, or professional of any kind, will give them sound advice, and will able to file paperwork appropriately. That’s what’s expected from a professional.
Sometimes professionals fall short of what is expected of them. Maybe the accountant’s advice ends up losing the client money, or the tax auditor misfiles the client’s taxes. This error in judgement can lead to the professional being held responsible in court.
When you and your business have accountant professional liability insurance, it means that you will not have to pay for defense or damages out of pocket. This insurance can also help protect the reputation of your business. Like other types of insurance, there are often limits and deductibles, but this can vary from policy to policy. You should talk to an insurance agent in order to learn more about the particular professional liability insurance policy that you can get for your business.