Finance Protection For Finance Professionals
February 12, 2017
Professionals in the field of finance are experts when it comes to numbers. Accuracy in the work is an indispensable attribute that clients expect and depend on. Integrity is another thing that clients expect, since they are entrusting their finances in the hands of a professional. Accurate and honest work builds goodwill, which needs to be protected at all costs since it is the foundation of a successful business.
However, it is not uncommon for even highly qualified and experienced professionals to make mistakes sometimes. Even after the numbers have been double-checked, there are times when errors may go unnoticed. In such cases, clients may file claims of negligence, which may damage the individual professional or the firm’s reputation as well as finances. So, while maintaining client’s financial health, finance professionals also need to protect their own finances. This can be done with a professional indemnity insurance (PII) coverage.
Who needs PII and what protection does it offer?
Finance professionals like accountants, tax preparers, bookkeepers, and small and mid-sized accounting firms need to get coverage against liabilities that arise due to errors and omission committed by them while performing their professional duties. Malpractice lawsuits are very costly and may prove too expensive for individual professionals or small firms, maybe even leading them to bankruptcy and debt. Getting PII is the primary way in which to protect your practice against any malpractice suits. Also, having PII coverage is often a prerequisite for clients considering employing a professional service. Some professional associations also require individuals or firms to have PII coverage as a condition for membership.
Professional indemnity insurance will cover the cost of the lawsuit and pay for any settlements that need to be made. Even minuscule errors or omissions in financial work can lead to heavy losses for clients, so it is understandable that they will want to shift the burden of that loss to the finance professionals responsible for those mistakes, even though they were made unintentionally. Some of the types of mistakes that can be covered by PII are:
- Delivering service that is unsatisfactory or subpar in quality to what was assured, like forgetting to file a client’s tax form in time,
- Negligence, such as failure to include certain information that should have been included,
- Any advice given that causes financial loss for a client, and
- Any errors or omissions.
Even when a claim may be wrongly brought against a professional, a PII will cover any costs that occur in the process of investigation and legal expenses.