How Much PI Insurance Does an Accountant Need?

IPs must hold PI as a condition of their licence — the relevant body sets requirements that broadly mirror the accountancy regulator’s. Insolvency claims tend to come from creditors, directors of the insolvent entity, or HMRC, and quantum can be material. IP cover is often quoted as a separate section within the practice’s PI or as a standalone policy; mixed accountancy/IP firms should ensure both sets of regulator requirements are met. Yes, company secretarial services — filings at Companies House, maintenance of statutory registers, advice on directors’ duties, share allotments and transfers — are within the standard “professional services” definition.

• Failure to display the EL certificate can result in a £1,000 fine.
• Records of EL insurance must be kept for 40 years, as claims can be made long after exposure.
• Even if you are a limited company, inadequate insurance can pierce the corporate veil in cases of negligence.
• Business rates or utility providers may require proof of insurance before providing services.
• Minimum requirements are a baseline; adequate cover should be based on a full risk assessment.
• Online business portals may require uploading insurance certificates to maintain seller status.
• Employee count fluctuations must be reported to your insurer to maintain valid EL cover.

Claims typically arise from missed filing deadlines (resulting in strike-off or fines), errors on share registers (resulting in disputes over ownership) and procedural failures in corporate restructurings. The exposure is usually smaller than tax or audit but not trivial; a botched share transfer in a £5m company sale can be a six-figure claim. Claims-made PI responds to claims made during the policy period, regardless of when the work was done. A claim from a client whose engagement ended five years ago is still a claim notifiable to the current insurer (subject to the retroactive date and any specific exclusions). The practical issue with former-client claims is file retention: defending a claim about work done years ago is much harder without contemporaneous files. The Limitation Act 1980 sets six years for contract / negligence; longer for latent damage. Practices typically retain files for six to ten years for this reason.

Why should accountants buy cover?

Having worked as a professional indemnity insurance broker for many years, there is one very important part of insurance cover that I find many clients are unfamiliar with – Run-off insurance. Below I briefly explain why this cover is necessary and what protection it provides. This is to protect both the business and their clients from financial losses suffered as a result of professional negligence. For professions like accountants and lawyers run-off cover is mandatory. Regulators such as the ACCA and SRA require a minimum of 6 years cover whereas the ICAEW require a minimum of 2 years but recommend 6 years.

2.3 Who polices what

Professional indemnity insurance policies operate on a ‘claims made’ basis – this means that the policy to respond will be the one in place at the time the claim is made, rather than when the negligence occurred. So, for example, if a client makes a claim against bet best betting promos today you tomorrow for alleged negligent advice given in 2017, then it will be the policy you currently have in place which will respond to claim. In general, a claimant has 6 years to make a claim against you from the date they have suffered the financial loss. However, in some instances, there is a possibility of bringing a claim after the primary limitation period – this is known as the secondary limitation period and gives an additional 3 years from the date the claimant first become aware of the negligence. If it is discovered that negligent advice had been provided from a professional over 15 years ago then there may not be a possibility to pursue a claim.

What level of PI cover do I need as an accountant?

There are some exceptions to this rule, for example if someone has deliberately concealed evidence or relevant facts then there could be an additional 6 years added. If the negligent act involves a minor, then they may also have additional time from when they reach 18 regardless of the 15 year rule. It is important that this is discussed and forms part of sales agreement. As a seller, by maintaining your own run-off insurance you can be assured that you have cover for your past liabilities and are not dependant on someone else maintaining this cover for you. Compensation can still be recoverable for negligence against a firm who has become insolvent. When a principal joins an existing practice, work done before they joined is normally covered by the firm’s PI in the same way as the rest of the practice’s history, provided the firm’s policy is fully retroactive (i.e., the retroactive date is not later than the original work). Work the principal did at a previous firm is covered by that previous firm’s PI (or its run-off). When a principal brings a book of clients across with them, the position is more complex — the old firm may or may not retain liability, and a “successor practice” or transfer agreement is usually needed. Fidelity Guarantee (also called Crime cover) protects the practice against losses caused by dishonesty of its own employees — theft of cash, fraudulent payments, embezzlement of client money. ACCA mandates fidelity guarantee for firms with principals or staff. ICAEW does not require it but it is widely held.

15. Insolvency practitioner PI and bonding

An architect’s plans may seem perfectly acceptable until fractures start to appear later down the line and the building starts falling down! Remember, if there is no Professional Indemnity cover in place when the claim is first made, then you will have no alternative other than to fund any legal advice, defence costs or losses incurred yourself which can not only be expensive but time consuming and very stressful. The cover is usually a small policy or section within the PI — limits of £100,000 to £500,000 are typical for small practices.

Professional indemnity insurance for accountants

Specific carve-outs sometimes apply for advice characterised as financial promotion (which would need separate FCA permissions) or for advice given to clients in unregulated investment schemes. Practices doing significant cryptoasset work should mention it at proposal and confirm specific coverage. The acquiring firm’s PI normally needs to be amended to add the acquired entity and (typically) to extend retroactively to cover the acquired firm’s historic work. Whether the selling principals also need to buy run-off depends on the structure of the deal and the wording of both policies. The default — without explicit arrangement — is often that the selling principals are personally exposed to claims arising from pre-completion work that surface after the acquirer’s policy ends.

IT and Cyber insurance for Accountants

The PI position should be a defined item in any sale or merger negotiation, not an afterthought. Three steps in order: stop responding to the client without taking advice; the same week, send the threat in writing to your broker (or insurer’s claims team) with a brief factual summary; secure the underlying file. The temptation to “fix it” with the client — writing off fees, doing additional work without charge, settling for a small sum — is the most expensive mistake practices make. Most PI policies require notification before settlement steps are taken; informal settlements before notification can be excluded from cover. Even apparently small threats can develop, and early notification preserves all options.

What if my firm has become insolvent?

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority, FCA firm reference 724952. Registered in England and Wales, Companies House 07014570. Trading address: c/o QCS, 53 Queen Charlotte Street, Bristol BS1 4HQ. Registered office: c/o Westcan, 5 Anglo Office Park, Bristol BS15 1NT. Email info@apexinsurancebrokers.co.uk, telephone 0117 325 0027. Social engineering fraud (fake invoice, CEO email scams) is increasingly an issue and may need a specific extension or standalone cover. Advice that a business is a going concern when it was not, or failure to advise of insolvency risk, is a well-trodden source of accountancy claims — particularly when the business subsequently fails and creditors look for recovery. The PI policy responds where the work was negligent and caused loss; the difficulty is causation and the counterfactual (what would the client / creditor have done with correct advice?).

• Minimum cover for Public Liability in many service contracts often starts at £1 million.
• Professional Indemnity minimums for accountants and auditors are often set by their professional institutes.
• Cyber insurance minimums in IT contracts are becoming standardized, often requiring £1-5 million cover.
• Product Liability cover of £2-5 million is a common minimum for manufacturers supplying large retailers.

Insurers ask supplementary questions about going-concern review procedures, file notes and risk-based engagement letter drafting for practices with material risk of such claims. Expect: corporate structure and principals; total fee income and split by service line (audit, accounts prep, tax compliance, tax advisory, payroll, company secretarial, insolvency, corporate finance, due diligence, forensic); largest single client and concentration risk; client sectors (especially regulated, listed or international); claims and circumstances in the last five to six years; regulatory standing (ICAEW/ACCA/AAT/FRC); any disclosable tax avoidance scheme involvement; AML supervision and procedures; IT and cyber controls; staff numbers and supervision arrangements. Audit firms face additional questions about audit clients and partner experience. Yes, where the circumstances reasonably could give rise to a claim. The classic accountancy circumstances are: client expresses dissatisfaction about a piece of work; a tax error spotted internally before HMRC raises it; an audit engagement where a material misstatement is discovered after sign-off; a former client’s solicitor asks questions bet gambling bonus app about old work; a regulatory letter.

How much cover do you need?

Notification preserves cover under the current policy. Practices sometimes hesitate to notify for fear of renewal impact, but the alternative — losing cover entirely if the claim arrives after a switch — is far worse. The PI market’s position on cryptoasset work has been cautious.

Tax and accounting advice on cryptoassets is generally within scope of professional services and would normally be covered, subject to standard exclusions. Specific carve-outs sometimes apply for advice characterised as financial promotion (which would need separate FCA permissions) or for advice given to clients in unregulated investment schemes. Practices doing significant cryptoasset work should mention it at proposal and confirm specific coverage. The acquiring firm’s PI normally needs to be amended to add the acquired entity and (typically) to extend retroactively to cover the acquired firm’s historic work.

What is accountants’ insurance?

IPs must hold PI as a condition of their licence — the relevant body sets requirements that broadly mirror the accountancy regulator’s. Insolvency claims tend to come from creditors, directors of the insolvent entity, or HMRC, and quantum can be material. IP cover is often quoted as a separate section within the practice’s PI or as a standalone policy; mixed accountancy/IP firms should ensure both sets of regulator requirements are met. Yes, company secretarial services — filings at Companies House, maintenance of statutory registers, advice on directors’ duties, share allotments and transfers — are within the standard “professional services” definition. Claims typically arise from missed filing deadlines (resulting in strike-off or fines), errors on share registers (resulting in disputes over ownership) and procedural failures in corporate restructurings.

Public Liability Insurance for Accountants

The exposure is usually smaller than tax or audit but not trivial; a botched share transfer in a £5m company sale can be a six-figure claim. Claims-made PI responds to claims made during the policy period, regardless of when the work was done. A claim from a client whose engagement ended five years ago is still a claim notifiable to the current insurer (subject to the retroactive date and any specific exclusions). The practical issue with former-client claims is file retention: defending a claim about work done years ago is much harder without contemporaneous files. The Limitation Act 1980 sets six years for contract / negligence; longer for latent damage.

So, where to start?

Practices typically retain files for six to ten years for this reason. When a principal joins an existing practice, work done before they joined is normally covered by the firm’s PI in the same way as the rest of the practice’s history, provided the firm’s policy is fully retroactive (i.e., the retroactive date is not later than the original work). Work the principal did at a previous firm is covered by that previous firm’s PI (or its run-off). When a principal brings a book of clients across with them, the position is more complex — the old firm may or may not retain liability, and a “successor practice” or transfer agreement is usually needed. Fidelity Guarantee (also called Crime cover) protects the practice against losses caused by dishonesty of its own employees — theft of cash, fraudulent payments, embezzlement of client money. Whether the selling principals also need to buy run-off depends on the structure of the deal and the wording of both policies. The default — without explicit arrangement — is often that the selling principals are personally exposed to claims arising from pre-completion work that surface after the acquirer’s policy ends. The PI position should be a defined item in any sale or merger negotiation, not an afterthought. Three steps in order: stop responding to the client without taking advice; the same week, send the threat in writing to your broker (or insurer’s claims team) with a brief factual summary; secure the underlying file. The temptation to “fix it” with the client — writing off fees, doing additional work without charge, settling for a small sum — is the most expensive mistake practices make. Most PI policies require notification before settlement steps are taken; informal settlements before notification can be excluded from cover.

Insurance requirements for chartered accountants

The Third Party (Rights Against Insurers) Act 2010, came into force in August 2016. Claims that arise after a practice has been placed into run-off are no different to claims that could have arisen when the practice was still trading - it is just a matter of when the negligence/loss is discovered. A few examples of work that might have been carried out before a practice ceased but where the possible claim has not yet come to light are: Surveyors may be at risk where underlying subsidence doesn’t materialise visibly for several years. Accountants may be at risk where an error in CGT calculations doesn’t transpire until a HMRC investigation commences. Solicitors may be at risk because they didn’t identify the correct title boundary which doesn’t come to light until the property is sold on. Even apparently small threats can develop, and early notification preserves all options. Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority, FCA firm reference 724952. Registered in England and Wales, Companies House 07014570. Trading address: c/o QCS, 53 Queen Charlotte Street, Bristol BS1 4HQ.

Does PI cover company secretarial work?

ACCA mandates fidelity guarantee for firms with principals or staff. ICAEW does not require it but it is widely held. The cover is usually a small policy or section within the PI — limits of £100,000 to £500,000 are typical for small practices. Social engineering fraud (fake invoice, CEO email scams) is increasingly an issue and may need a specific extension or standalone cover. Advice that a business is a going concern when it was not, or failure to advise of insolvency risk, is a well-trodden source of accountancy claims — particularly when the business subsequently fails and creditors look for recovery.

12.5 Audit committee scrutiny

The PI policy responds where the work was negligent and caused loss; the difficulty is causation and the counterfactual (what would the client / creditor have done with correct advice?). Insurers ask supplementary questions about going-concern review procedures, file notes and risk-based engagement letter drafting for practices with material risk of such claims. Expect: corporate structure and principals; total fee income and split by service line (audit, accounts prep, tax compliance, tax advisory, payroll, company secretarial, insolvency, corporate finance, due diligence, forensic); largest single client and concentration risk; client sectors (especially regulated, listed or international); claims and circumstances in the last five to six years; regulatory standing (ICAEW/ACCA/AAT/FRC); any disclosable tax avoidance scheme involvement; AML supervision and procedures; IT and cyber controls; staff numbers and supervision arrangements. Audit firms face additional questions about audit clients and partner experience. Yes, where the circumstances reasonably could give rise to a claim.

How much does it cost?

The classic accountancy circumstances are: client expresses dissatisfaction about a piece of work; a tax error spotted internally before HMRC raises it; an audit engagement where a material misstatement is discovered after sign-off; a former client’s solicitor asks questions bet gambling bonus app about old work; a regulatory letter. Notification preserves cover under the current policy. Practices sometimes hesitate to notify for fear of renewal impact, but the alternative — losing cover entirely if the claim arrives after a switch — is far worse. The PI market’s position on cryptoasset work has been cautious. Tax and accounting advice on cryptoassets is generally within scope of professional services and would normally be covered, subject to standard exclusions. Registered office: c/o Westcan, 5 Anglo Office Park, Bristol BS15 1NT. Email info@apexinsurancebrokers.co.uk, telephone 0117 325 0027. Having worked as a professional indemnity insurance broker for many years, there is one very important part of insurance cover that I find many clients are unfamiliar with – Run-off insurance. Below I briefly explain why this cover is necessary and what protection it provides. This is to protect both the business and their clients from financial losses suffered as a result of professional negligence. For professions like accountants and lawyers run-off cover is mandatory. Regulators such as the ACCA and SRA require a minimum of 6 years cover whereas the ICAEW require a minimum of 2 years but recommend 6 years.

• Insurance policies must be reviewed annually to ensure they meet updated legal minimums.
• Notify your insurer immediately if your business activities change to avoid invalidating cover.
• Keep all insurance certificates and policy documents accessible for inspection by authorities.
• Use a broker specializing in your industry to navigate complex minimum requirement landscapes.

Professional indemnity insurance policies operate on a ‘claims made’ basis – this means that the policy to respond will be the one in place at the time the claim is made, rather than when the negligence occurred. So, for example, if a client makes a claim against bet best betting promos today you tomorrow for alleged negligent advice given in 2017, then it will be the policy you currently have in place which will respond to claim. In general, a claimant has 6 years to make a claim against you from the date they have suffered the financial loss. However, in some instances, there is a possibility of bringing a claim after the primary limitation period – this is known as the secondary limitation period and gives an additional 3 years from the date the claimant first become aware of the negligence. If it is discovered that negligent advice had been provided from a professional over 15 years ago then there may not be a possibility to pursue a claim. There are some exceptions to this rule, for example if someone has deliberately concealed evidence or relevant facts then there could be an additional 6 years added. If the negligent act involves a minor, then they may also have additional time from when they reach 18 regardless of the 15 year rule. It is important that this is discussed and forms part of sales agreement. As a seller, by maintaining your own run-off insurance you can be assured that you have cover for your past liabilities and are not dependant on someone else maintaining this cover for you. Compensation can still be recoverable for negligence against a firm who has become insolvent. The Third Party (Rights Against Insurers) Act 2010, came into force in August 2016. Claims that arise after a practice has been placed into run-off are no different to claims that could have arisen when the practice was still trading - it is just a matter of when the negligence/loss is discovered. A few examples of work that might have been carried out before a practice ceased but where the possible claim has not yet come to light are: Surveyors may be at risk where underlying subsidence doesn’t materialise visibly for several years. Accountants may be at risk where an error in CGT calculations doesn’t transpire until a HMRC investigation commences. Solicitors may be at risk because they didn’t identify the correct title boundary which doesn’t come to light until the property is sold on. An architect’s plans may seem perfectly acceptable until fractures start to appear later down the line and the building starts falling down! Remember, if there is no Professional Indemnity cover in place when the claim is first made, then you will have no alternative other than to fund any legal advice, defence costs or losses incurred yourself which can not only be expensive but time consuming and very stressful.

• Fines for non-compliance with Employers' Liability insurance are enforced by the Health and Safety Executive (HSE).
• Operating without required motor insurance can lead to vehicle seizure, fines, and penalty points.
• Breaching contractually agreed insurance levels can lead to contract termination and legal claims.
• Operating without mandated Professional Indemnity can result in disciplinary action from your regulatory body.
• Inadequate insurance can lead to personal liability for directors if the company cannot cover claims.