Protection summed up
Pick a professional indemnity insurance for bookkeepers package (if your turnover's under £25,000) or build your own.
Unfortunately, the numbers don't always add up. Fixing a mistake for an irate client takes time and money, and not doing it well can cost you your reputation.
If it goes further and there's a claim against you, bookkeepers' insurance helps. Legal costs and compensation are paid by your policy, leaving you free to run your business.
Easy as 1,2,3.
Only kidding. Of course you do.
Especially if you're an ICB practice licence holder, because then it's compulsory. But, besides your professional body saying you need it, and the fact it looks good, there's another more salient reason.
Bookkeepers' PI insurance protects you if someone accuses you of making a mistake. The fact you're dealing with someone else's money means your expertise is under close scrutiny, potentially increasing your chances of just such an accusation.
If that happens – even if you haven't done anything wrong – solicitors get involved and clients want payback. It's a tricky one because you have to do something about it – claims don't just go away. But that means spending money and time away from your business. Hardly ideal when times are tough.
Now, you already know that bookkeeping insurance helps by paying for your defence, fixing your mistakes and compensating your client. But it's more than that. Having it means you can get on with running your business, confident you and your reputation are protected.
And that's priceless.
ICB practices have to have at least £50,000 cover. But, in all honesty, that's not going to go very far if things go wrong. Try 2.5 times your annual turnover instead.
But really, there's no right or wrong answer. Your business is exactly that and your level of cover should be right for you.
If it helps, consider exactly what you do, who your clients are and how much they pay you. Also consider the worst-case scenario and the possibility of a knock-on effect if you do make a mistake.
Always bear in mind that you can’t have too much cover. Your legal defence can cost many tens of thousands of pounds – and that’s before the compensation bill from your client arrives. Your level of cover has to be enough to cover all this.
It’s a tricky one to get right. Have a read of this guide or call us if you need more help.
Broadly, negligence claims and allegations made against you by clients and third parties, because of mistakes you’ve made and things you’ve failed to do.
Specifically (but depending on the policy wording):
- Intellectual property infringement
- Loss of documents or data
- Negligent misrepresentation or misstatement
- Employee dishonesty
- Virus transmission
- Breach of confidentiality
- Failure of third-party equipment
But that’s not all. Some professional indemnity policies can fix a mistake before your client is even aware of it, thereby preventing a claim in the first place.
Public liability insurance is for when you go out and about on business, or have visitors to your office. It’s for claims of physical damage to property and people. Useful if you’re clumsy.
Employers’ liability insurance covers your business if an employee sues it for damages. Claims are usually because they’ve suffered injuries and illnesses as a consequence of working for you. It’s a legal requirement for UK businesses with employees.
Office and property insurance covers the things in your office (furniture, plants, fixed IT equipment etc) and portable insurance covers gadgets and technical equipment away from the office (laptops, tablets, projectors etc). If you’re not sure it’s worth insuring, add it all up – it’s probably worth more than you think.
Business interruption insurance means you can still work when your office is out of action. Be it flood, fire or flea infestation, you’re covered for the costs of setting up elsewhere and for any lost revenue in that time.
Directors’ and officers’ insurance covers your company bosses. Anyone from regulators to shareholders to competitors can accuse you of not running a business with due care. Worse, directors are personally liable for their actions. The good thing is this insurance covers your defence costs and any compensation you have to pay. So you can put away your chequebook.
Glad you asked.
The simple answer is: we know what we're doing. Professional insurance is all we do so we know what you need, even if you don't.
We also know that buying insurance can be, well, a bit of a pain. So we make sure getting yours is quick and hassle-free.
We do all that while treating you like a human being, too. You won't find a call centre here. Or a phone menu. And we've banned nonsense insurance jargon.
Plus, every insurance-related question you can think of is answered in our School of Risk, and you'll get our quarterly risk advice email – 'The Waggle' – to help you avoid problems in the first place.
If you're after a second opinion, have a look at our customers' feedback. They're the ones you should really listen to.