Requirement of Professional Indemnity Insurance for Chartered Accountants
Professional indemnity insurance acts as a safety net for professionals like chartered accounts if their risk management strategies fail. If due to their professional advice or negligence, a client or any third-party faces a financial loss there are chances that the chartered account may have to face severe consequences. They might be held legally and financially responsible for the losses.
- Professional indemnity insurance for chartered accountants protects them and their business from third-party allegations and claims like acts of negligence, inaccurate advice, errors or omissions etc. committed that result in a financial loss.
- It covers costs, fees and defence expenses incurred during the investigation.
- It gives a sense of assurance to the clients or third parties that in case there is some issue, the professional would take measures to resolve the issue.
Coverage under Professional Indemnity Insurance for Chartered Accountants
Professional indemnity insurance for chartered accounts is designed especially for independent CAs or CA firms. These firms or individuals must practice and offer services in areas like chartered accountants, financial accountants, management consultants etc. and wish to secure their professional reputation and financial position.
Insuring clause
An insuring clause in an insurance agreement outlines the protections and coverage offered by the insurance company. Thus, this clause defines the scope of coverage and lists the risks and claims the insurer is liable to face when a claim arises.
Professional indemnity insurance for chartered accounts usually covers:
- Defamation
- Defence costs, legal costs
- Unintentional breach of intellectual property rights
- Unintentional breach of confidentiality
- Loss of documents or data
What is not Covered?
Exclusions in an insurance document are conditions under which the insurance company is not liable to pay the insured. Thus, the exclusion is everything that is not covered under the insurance policy. For better decision-making, one should compare the exclusions of different insurance policies. It helps understand the level of risk the insured will still have to face even after purchasing an insurance policy.
Some common exclusions under indemnity insurance for a chartered accountant may include:
- Violation of any law or any criminal act
- Fraudulent activity or dishonesty act
- Damage to the property or any bodily injury
- Fines and penalties
- War or terrorism risk
- Services provided during drunken state
Conclusion
Comprehensive professional indemnity insurance for chartered accountants aims to provide a financial shield against failure to perform professional services to their clients or alleged wrongful acts in delivering professional service.
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