Members of professional organisations often have to fulfil certain requirements, and accounting bodies fall into this category. CIMA insurance rules say members of the organisation must have professional indemnity insurance in place. This is because an increasing awareness of someone’s personal options when they feel they have been wronged means there is greater focus on taking legal action in the event of a dispute.
Of course many professionals including many accountants will get through most of their working lives and careers without having to defend a legal claim. However, there is a notable chance that being sued, while it is unwelcome and can often be avoided, can be a real risk.
Furthermore, certain businesses and clients may actually insist that a professional has a form of indemnity cover in place before they are willing to conduct business with them. Examples might include local authorities, and bigger corporate clients.
CIMA insurance requirements were brought in because the challenges of a legal claim can be damaging no matter who is on the receiving end. A long and drawn out process can mean hiring legal help and even having to stump up the compensation bill if it is awarded against the professional in question.
Of course, some professionals will be able to pay for perhaps one or two legal cases of a limited nature. But claims have to be defended whether or not they are valid and even if they are untrue can run up significant legal expenses if they get far enough through the system. In the worst cases this can actually threaten the financial future of a company.
Indemnity insurance pays not only for the cost of a legal defence, but also the cost of any compensation awarded against the policyholder. In broad terms it protects the company should it be accused of making a mistake, error, omission, or act of negligence in day to day business.
CIMA insurance with indemnity also typically pays out if somebody is accused of damaging or losing important documents belonging to a client, or is said to have breached someone’s confidentiality or copyright. Policies even protect someone if they are accused of defaming somebody, perhaps through libel, for example.
Members of the Chartered Institute of Management Accountants know all too well why insurance is essential. Many CIMA members have found themselves facing claims against them for various mistakes and problems that have presented themselves on a job or after a job has been completed. CIMA insurance has helped them to right the mistakes that were made and without it they could have ended up losing their business as well as their reputation.
Why CIMA Insurance is Important
When you become a member of CIMA you will find that insurance is compulsory. It is not something that you can avoid or forget about. Without professional indemnity insurance you will be unable to work in the industry and many third parties will not allow you to work for them if you do not have the right insurance either.
When you realise the importance of CIMA insurance, you will see that even if it were not compulsory, it would still be essential to have. Even the most professional accountants who have been in the profession for years are not immune from accidents or mistakes. You could do a job for fifteen years before something finally goes wrong. The mistake would not even have to be your fault for you to have to pay for it. So being protected against the worst case scenario is definitely worthwhile!
CIMA insurance will help you to pay for claims made against you regarding negligence, injury/damages, breach of confidentiality and defamation to name just a few. If you work in the consultancy sector then it is your job to give the third party a business plan and advice on how to move ahead. If the company follows the plan but it doesn’t work out and they suffer a loss, it is possible that they will solely blame you. Even if the advice you gave was the best that anybody could give and in theory it should have worked, you cannot predict what will happen in business and unfortunately that does mean that you could get the blame for anything that goes wrong.
Overall CIMA insurance is designed to give you the protection that you need in the event of a claim being made against you. It is compulsory for good reason and there are varying levels of insurance that you can choose from so always know what you need before you actually apply.
CIMA insurance is an indemnity policy that protects members of the Chartered Institute of Management Accountants, providing protection against both statutory and contractual obligations. There are various types of risk management insurance available for businesses and contractors, all which can help minimise any financial loss as well as personal stress if a claim is made against you and a CIMA Insurance indemnity policy is one of these solutions.
Indemnity insurance can help keep your business remain financially unscathed should a claim be sought against you or your company which could affect its financial standing. The sort of challenges that any company potentially faces can typically include defending a claim against you as well as covering you for any damages you become liable for. Claims could include such things as public liability; product liability; unintentional infringement of intellectual property rights; loss of data or documents; accidental breach of confidentiality; and dishonestly, plus much more.
If you are considering CIMA insurance, then when it comes to buying it, you need to ensure that you buy it from the right place. This could well be a specialist broker of CIMA indemnity cover. They often have bespoke cover and tiered levels of cover, meaning you get exactly the protection that you need.
What to think about when buying the cover
There are a number of considerations for you when choosing your cover. Of course, your broker can help you, but it is imperative that you are comfortable with the product that you choose.
When buying your policy, check out your liability for the excess in the event of a claim.
And do be aware that claim times after the incident could take some while, so you consider taking out retroactive cover. This protects you against claims that arise out of a product or services that was actioned or provided before the cover started, so check on the policy.
Always make sure that you have the right sum insured so that, should a claim be made against you, you would be fully covered.
As the benefits and features of CIMA insurance can vary among the various providers, do read through the small print to confirm the amount of cover you have, noting how long a policy must be in force for before you can make a claim.
Finally, even the best managed and run companies can face the prospect of financial disaster in the event that a claim be sought against it. CIMA Insurance can take away this concern and give you the peace of mind that you are properly protected.
What is the best place to look for CIMA insurance? Well, first of all, let’s discuss what it can do for you. CIMA Insurance is a policy that protects members of the Chartered Institute of Management Accountants, providing cover against both statutory and contractual obligations.
If you run a business, then you will need to protect yourself against the unexpected. Claims against you; the loss of sensitive documents, negligence, etc, these are difficulties that any business could be challenged with.
Many businesses would go under when faced with a claim against them for damages or negligence. A CIMA insurance policy could help take away the stress and provide financial assistance, as well as legal and compensation costs.
There are various types of professional indemnity insurance (PII) and, often, different levels of cover too, which can help protect you and your business against the financial fallout of a claim.
So, where can you buy CIMA insurance?
Finding the right cover is easy when using a specialist provider of CIMA insurance. A specialist provider can draw on their expertise within the PII sector, so that they can provide you with the protection that meets your requirements.
As it is such a niche product, again, going with someone who specialises in this sector means you will have access to many different types of cover.
What do you need to consider when looking buying the cover?
Ultimately, what your business needs will be are as individual as you are. However, here are some key points to consider:
- check out how much the excess will be in the event of a claim;
- see if there is a “run-off” period on your policy. Often, there may be a long delay between an event and the subsequent claim. For example, if you are in the middle of changing insurers or shutting your business, arrange a “run-off” cover for a period of time after the cancellation of the existing policy. Or, where changing insurers, see if your new insurer does accept new claims for incidents that happened before the policy inception date;
- under insurance can be a problem if you do not choose the amount of cover that you need wisely, so do get ample cover;
- the benefits and terms of the insurance can differ depending on the providers. Therefore, always ensure that you check them to confirm the pertinent points of the insurance.
Remember that even the best run companies can still face the prospect of financial ruin should a claim be made against them. CIMA insurance can take away this worry.