- Members need adequate insurance to cover all the work or services offered.
- How much cover you need is determined partly by our regulations, rules, professional standards and guidelines.
- There are additional specific obligations for Australian CPP holders under the Liability Capping Scheme.
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Your practice is worth protecting
What is Professional Indemnity insurance?
Professional Indemnity (PI) insurance is the safety net that protects you if your practice’s risk management strategies fail.
If a client or third party is unhappy with your advice they may hold you, their accountant, legally responsible and make a claim for economic loss.
Accountants can also be found liable for breach of contract, negligence or breach of statute, such as misleading and deceptive conduct in consumer protection laws.
PI Insurance will assist with protecting you personally, your employees and your business against claims.
Whether you’re opening, merging or selling your practice, arranging PI insurance will take time. Allow at least 6 weeks to ensure your cover is in place before you open the door.
Mind the gap
Your PI insurance policy should cover all aspects of your services and work. Generic policies may leave gaps in your insurance or not offer enough cover.
The level you need depends on the size of your business, and nature of services you provide. Fees charged for the type of work or service you provide can determine the minimum amount of PI insurance you need.
Other factors such as your industry, number of practitioners and staff, and claims history can also impact your cover.
There may also be PI insurance requirements based on where you’re located. For example, members in Australia are required by ASIC to have fidelity cover for registered insolvency practitioners.
This type of cover is unlikely to be included in a generic policy, which is why it pays to make sure you’re fully covered. Likewise, a generic indemnity insurance policy may not be adequate for a New Zealand based auditor.
Like other insurances, your PI insurance may have an excess. The excess charged on your policy is determined by the number of principals and your fees.
If you take on a new service, even as a one-off, always consider if it is covered by your insurance policy.
Review the overall risks in your practice and implement good strategies to eliminate or manage those risks.
Members' handbook and other risk resourcesRegulations and Guidance