One may make the assumption that an Accounting Firm (CPA/EA) has very little if any liability. That assumption may be true to a certain extent but the fact is that liability still exists, and the consequences can actually be critical or even fatal to the business.
That’s why Accounting Firms carry Accounting Firms General Liability Insurance, so that they are financially covered in the unlikely event of a loss occurring on premises or even elsewhere.
Losses in an Accounting Firm can come from anywhere. They could come from an employee just slipping on an icy walkway and injuring him/herself. Just medical expenses alone could tally up astronomical expenses quickly. Not to mention if that employee were carrying a phone that got damaged. Let’s not forget about any of that employee’s pain and suffering due to the fall that the Firm is sued for.
Damages don’t necessarily have to come from a slip and fall. Maybe sitting down with a client coffee is spilled on a client’s laptop computer and renders the computer useless. All important information that may have been on that computer would be lost. Suppose no back-up existed for that information? Without Accounting Firms General Liability Insurance, the Firm could be responsible for any losses incurred in that incident.
Losses of the physical nature are be covered by Accounting Firms General Liability Insurance as a general rule of thumb. Errors and Omissions Policies cover any errors or misrepresentations made by an employee of the firm resulting in financial loss or otherwise.
The importance of reading over your Accounting Firm's General Liability Insurance policy cannot be overstated.
Reading over the Accounting Firm's General Liability Insurance helps the Firm’s Principal to recognize any gaps in coverage. Once those gaps are recognized, they can be addressed and plugged as necessary.
How much coverage is needed to sufficiently cover the firm in the event of loss depends on a couple of factors. First, consider how much exposure to loss the firm has. As a general rule, enough coverage is needed to successfully cover the Firm in the unlikely event of a loss. Secondly, the individual State laws where the Firm is located can determine exactly how much and what kind of coverage is needed.
These among other questions will be addressed by the Insurance Agent.
As with any insurance product (or any investment in any Firm), the importance of reading the policy and knowing exactly what is covered and what isn’t paramount. First, know what it is that is being purchased as far as coverages. Secondly (almost equally important), know what is covered and what isn’t. Have a licensed Insurance agent for the state where the Accounting Firm is located guide the way when purchasing an Accounting Firm's General Liability Insurance. The wrong time to find an insurance gap is when a loss occurs.