CIMA Professional Indemnity Insurance – What you Should Know
Do you know everything you should about CIMA professional indemnity insurance? If not then now is definitely the time to learn!
It is worth pointing out that CIMA insurance is mandatory which means if you do not have it, it is illegal to work for yourself as a CIMA member. The reason it is mandatory is because without the adequate insurance, the company you work for or yourself, could face financial ruin if a claim were to be made against you. As an accountant you put yourself at risk of a claim being made against you with every job that you take. This is especially the case if you work as a consultant. The advice that you give can make or break a company and obviously if it breaks it, you will have a very angry company wanting compensation!
How CIMA Professional Indemnity Insurance Works
A claim can be made against you for any of the following:
- Breach of Confidence
- Defamation
- Loss of Documents or Data
- Negligence
- Damages/Injury
If you are accused of any of the above and you are found guilty, it could cost you thousands upon thousands of pounds worth of compensation. Even if you are cleared of the claim, it will still cost you hundreds and possibly thousands of pounds to defend yourself. It all depends upon the claim and the seriousness of the accused act.
If you are being accused of slander then the claim will be considered more serious than if you are accused of damages to the third party property (again depending upon how it happened). A breach of confidence will also be frowned upon as being a professional you are trusted and required by the law to keep everything you know confidential.
Sometimes you can do something wrong without even realising it. Perhaps you have missed something vital in your business plan. When the company followed your advice, because you had missed out vital information it caused the plan to go completely wrong and losses were made. Maybe you didn’t have enough information provided by the company for you to make the best business plan. If the third party forgets to tell you something and you go ahead and make a plan, if that plan then goes wrong the company will still blame you.
Overall it is never nice to think about the possible things that could go wrong. However, it is necessary if you are to protect yourself and your business. CIMA professional indemnity insurance will help to protect you against all possible claims that could be made against you.
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