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Professional indemnity insurance defends you against claims of negligence, breach of confidentiality, dishonesty, libel and slander. We offer up to £5,000,000 cover.
Nobody enjoys sorting out tax; that’s just how it is. That’s good for you, though, as it means you’ll always have a steady flow of messy tax affairs to put right.
Your clients are paying you to do something they can’t, so it’s reasonable they expect your work to be of a high standard. So, should a mistake in your work cost your client money, you could find yourself facing allegations of professional negligence.
Professional indemnity insurance can help save you time, money, and your reputation. It covers the costs of legal fees, as well as compensating your client. That’s handy.
If you’re a member of a professional body for tax advisers, or you’re a chartered accountant, it’s likely you’re required to have professional indemnity insurance.
Depending on your professional body, they may require you to have a specific policy wording. Our wordings are industry standard, and are approved by the ICAEW.
It’s also a legal requirement that any business with one of more employees have employers’ liability insurance. If one of your employees suffers a workplace injury or illness and you’re to blame, it covers your defence costs. If you are liable, it can compensate your injured employee.
This will depend on which, if any, professional bodies you’re a member of.
Members of the Chartered Institute of Taxation only need their own PI insurance if they’re self-employed. Otherwise, their firm’s insurance should cover them.
If your gross fee income is less than £400,000, CIOT insist you have the greater of two and a half times your gross fee income, or £100,000.
If your fee income is greater than £400,000, you’re required to have a £1m level of indemnity for each and every claim.
The Association of Tax Technicians have the same guidelines as the CIOT, so follow the advice above.
For ICAEW members with an income less than £600k, your level of indemnity should be two and a half times your firm’s gross fee income.
If your income is more than £600k, your level of indemnity should be £1.5m.
Sole traders have to have at least £50,000; all other firms at least £100,000. Perhaps oddly, there’s a maximum too: £1,500,000. Firms with large turnovers or specific client requirements can get more, however.
ACCA members with an income of up to £200k should have a level of cover of at least two and a half times your firm’s gross fee income for the last financial year or 25 times the largest fee, whichever is greater.
If your income is between £200k and £700k, your level of cover should be the aggregate of £300k and your firm’s total income or 25 times the largest fee, whichever is greater.
If your income is over £700k, you need £1m of cover, or 25 times your largest fee, whichever is greater.
If your professional body don’t specify a minimum level of cover, or you’re not a member of one at all, you’ll have to decide how much insurance is appropriate for what you do.
Remember, it’s always better to have too much, than too little.
An ICAEW approved wording is industry standard and already has everything you need. The insurer has to note any changes they’ve made to this wording by including a ‘difference in conditions’ clause.
Otherwise, you should ask for your policy to include ‘retroactive cover’. This extends your insurance back to a date in the past, so any work done before buying the insurance is also covered. You should backdate your cover at least six years, or to the date you started trading.
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.
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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.
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