Professionals working in the field of accountancy have to abide with a number rules and regulations, not least those laid down by industry bodies. The CIPFA or Chartered Institute of Public Finance and Accountancy has its own requirements which include that practising members have professional indemnity insurance in place. CIPFA insurance requirements are similar to those laid down by other accountants’ organisations.
The market for professional indemnity insurance is quite broad and the product should not be confused with other types of professional cover such as public liability insurance, although this can be included with some indemnity plans. Employer’s liability insurance should also not be confused with this brand of cover, although this can often be bought from the same firms which supply indemnity protection.
In short professional indemnity insurance will pay the policyholder’s legal costs in the event they are sued. As far as accountants are concerned this can happen if a client feels that the advice they have received has been ineffective or worse still has cost them money. Legal cases can also be launched if a client feels they have actually been the victim of a mistake made by an accountant or accountancy firm.
Subject to certain limits laid down in each policy, CIPFA insurance cover will pay the cost of someone’s legal defence and also pick up the bill for any compensation which might be awarded against the policyholder if they lose a case.
Provided they were honest, IE not malicious, all professional mistakes committed by an accountant or accountancy firm will often be covered, and the wording also often includes omissions, acts of negligence, and infringement of intellectual property rights or of confidentiality. Protection is also often provided for the likes of allegations that a policy holder has somehow defamed someone through libel.
Should an accountant or accountancy firm lose important documents or data belonging to a client, they will also be covered against any legal action. CIPFA insurance requirements are not only designed to make life easier for an accountancy professional in the event they face legal action, but also to potentially make doing business in easier. Many potential clients may not consider a company which does not have the relevant Indemnity Insurance in place.
Members of the Chartered Institute of Public Finance and Accountancy (CIPFA) can be protected if legal action is sought against them relating to their statutory and contractual obligations. CIPFA insurance provides a financial safety net, as well as providing legal help, should a claim be made against you.
Protecting your livelihood with CIFPA professional indemnity insurance should be considered by anyone who works within this profession as running a business isn’t just about bringing the money in and keeping your customers happy. Awards made by Courts to dissatisfied customers are on the rise and in today’s uncertain economic climate, you need to protect your financial livelihood as much as you can. You have to make certain that you have the necessary safeguards in place should something go wrong.
Professional indemnity insurance can help your company to overcome unexpected hurdles and minimise any financial loss – as well as the undoubted stress you will personally face – in the event of a claim against it. It will also help limit any damage to your reputation.
Protecting your livelihood against financial disaster caused by a claim against it does not need to be expensive and can help keep your business afloat should this happen. CIFPA professional indemnity insurance will help to ease any financial worries in such a situation by providing recompense.
Deciding where to purchase your CIFPA professional indemnity insurance does not need not be a difficult exercise, nor does it have to be time consuming.
When considering your professional indemnity insurance, using a specialist broker is a strong consideration. A specialist professional indemnity insurance broker will often have customised policy options available for your company’s needs, to enable you to get the coverage you require. CIPFA insurance brokers will draw on their expertise in the sector, enabling them to provide a policy that best suits your needs.
Things to note before you buy
To ensure that the cover is right for you, check:
- Any policy excesses you would be liable for in the event of a claim;
- Any policy exclusions which would render you ineligible to make a claim;
- That the sum insured is adequate.
Having the peace of mind that you have CIFPA professional indemnity insurance cover in place can help you focus on the most important thing – your buiness.
CIPFA insurance is targeted specifically members of the Chartered Institute of Public Finance and Accountancy. And as members should know, professional indemnity insurance is compulsory which means that if you do not have it, you will be unable to complete any accountancy work for any third party. So why exactly is it important to take out insurance and why can’t you make do without it?
Understanding CIPFA Insurance
The main reason insurance is needed for people in this industry is because you are providing a professional service where your advice means a lot to the third party. Due to the fact that your advice and work could potentially make or break a company, it is vital that you protect both yourself and the company with adequate insurance.
Just think; if you do a job and through no fault of your own the company loses money as a direct result of your work, it would not look good. The third party is likely to blame you directly and a claim will be made against you.
It could be that the company did not provide you with adequate information in order for you to make a successful business plan. If you are given the wrong information then you could end up creating a plan that you feel would be successful, yet it will fail because of the information that you were lacking. Technically it would be the third party’s fault, but they could always turn around and blame you claiming that you are the professional, not them. Defending yourself against the claim will cost quite a lot in legal fees and luckily enough professional indemnity insurance can cover that.
Of course the above is just one example of something that could go wrong. If you work in taxation there could be problems with documents going missing or again you could end up with a lack of information and you could find yourself in trouble with the HM Revenue.
Whatever the issue, CIPFA insurance will help to protect you. Generally it will protect you and the third party against defamation, loss of documents and data, negligence, injury and damages and breach of confidence. There are different levels of cover available and so it would be worth looking into what your actual business needs are before you take out insurance.
CIPFA insurance protects members of the Chartered Institute of Public Finance and Accountancy, providing invaluable cover against members’ statutory and contractual obligations.
So why would you need it? If you run a company, you may think that nothing will ever go wrong – for example, you will never be sued or accused of negligence, or sued for injury caused on your premises. However, sadly some things are beyond our control and things can, and do, go wrong, even in the best of run and managed companies.
The key to professional indemnity insurance (PII) is minimising any financial loss should a third party claim arise. It can help your business survive if something goes wrong.
Have you ever asked yourself how or even – would – your company continue to exist if it was faced with a claim against it? Having the peace of mind and financial protection of a CIPFA insurance policy could help.
If you are thinking about buying CIPFA insurance, then using a specialist provider can help you towards finding the right product. A specialist provider can draw on their expertise within the PII sector, so that they can provide you with the necessary protection.
And buying your CIPFA insurance this way does not need not be difficult, nor time consuming, or costly.
When selecting your insurance, do note that, generally you will be liable to pay an excess on your policy.
And choose the right level of cover. Often, policies can have two or even more different levels of cover, so ensure that you get the right one.
Your insurance provider can assist you if you are unsure as to what is right for you.
Finally, before you sign on the dotted line, do double check that the policy gives you everything you need – look at the excesses; policy exclusions; sum insured; and how long the insurance must be in force for before you are entitled to make a claim.
CIPFA insurance can provide a financial safety net should your business be the subject of a claim against it, so never underestimate its importance.