Certified public accountants fulfill vital roles for the people and businesses they serve, and with their responsibility comes potential risk. Every CPA is aware of the consequences that a decimal error or failing to deliver promised services can cost, and those costs often can be quite high. CPA insurance helps certified public accountants in Massachusetts protect themselves from a range of covered risks, which often include potential errors like these.
CPA insurance is a specialized form of commercial insurance that’s designed to meet the risk mitigation needs of certified public accountants. Many policies are drafted as multi-coverage package policies, which means they typically provide several protections.
The vast majority of certified public accountants in Massachusetts should have accounting insurance for themselves and their offices. Although accounting work may seem like a low-risk industry as far as physical risks are concerned, the potential liability lawsuits that CPAs might face can be expensive. (Additionally, most CPAs are still exposed to at least a few property-related risks that insurance can help protect against.)
Professional liability coverage is often one of the most important coverages that CPAs get, for this is the coverage that normally protects against mistakes in work. Should a client or third-party sue over an alleged work error, the lawsuit normally falls under the domain of this coverage. Sometimes, professional liability insurance for CPAs is referred to as “errors and omissions coverage” or “E&O coverage.”
CPAs shouldn’t make the mistake of thinking that professional liability coverage is the only protection they need, though. Depending on their particular situation, CPAs might also want to get:
Depending on what coverages are desired, CPAs may choose from a few different types of accounting policies.
CPAs who want only professional liability coverage can usually purchase it through a stand-alone policy that offers only this protection. Doing so, however, often leaves CPAs exposed to other risks and generally isn’t recommended for this reason.
A package policy that combines professional liability coverage with some of the other aforementioned coverages is usually preferable. There are two main types of package policies:
Most accountants remain independent of their clients and typically don’t become fiduciaries, but sometimes avoiding this role is impossible. Any CPA who becomes a fiduciary to a client should be aware of their responsibility and risks, and they ought to carefully review their insurance protections with an insurance agent who specializes in accounting policies.
Accounting policies frequently provide limited coverage for alleged or actual breaches of fiduciary responsibility, and some exclude the risk altogether. An agent who specializes in accounting policies can help CPAs who need insurance against this risk find the best available policy for their situation.
For help finding CPA insurance, contact the independent insurance agents of The Feingold Companies. Our agents have worked with many accountants in Massachusetts, and we’re ready to assist you with finding a suitable accounting policy that will provide robust protections.