Bookkeeper Professional Liability Insurance
Are you an Australian business professional who provides your clients with bookkeeping, tax, or BAS services? If so, there are two important types of liability coverage you need.
First, the Tax Practitioners Board (TPB) requires that all BAS agents hold professional indemnity (PI) insurance coverage. This is an important consumer protection mechanism that helps compensate your clients in the event that they suffer any form of financial loss due to the services that you provide.
The second requirement is bookkeepers public liability insurance. This policy can protect your workplace against financial risks associated with death, bodily injury or property damage that occurs on-site.
Not sure what these types of insurance entail or how to get them? Read on for the answers you need.
What is Professional Indemnity Insurance?
Once only required by doctors, lawyers and others in high-stakes fields, professional indemnity insurance, or PI insurance, is now broader-termed, and for good reason.
In short, this coverage is recommended to any business that provides professional opinions, services, and counselling to others. From IT consultants to estate agents, there are many industries centred on sharing expert advice. As a bookkeeper, this includes your services, as well.
You are responsible for recording and managing the daily financial transactions of the small businesses you serve. Even if you work with the most sophisticated software in the industry, there’s always the risk of simple human error.
What happens when the advice you share or the steps you take lead your clients in the wrong direction? What if they experience a significant loss due to your oversight or honest mistake?
When you invest in bookkeepers PI insurance, you cover yourself in the event that a third party suffers as a direct result of the professional services you provide. As esteemed as they might be, your professionalism and valued services aren’t enough to protect you against client claims. If you’re forced to pay legal and defence costs to protect your reputation and avoid a lawsuit, you’ll need financial backup to do so.
Why Do I Need It?
What would happen if a third-party client suffered a major financial setback after following direct advice that you shared? While it’s never your intent to steer them in the wrong direction, you could face a major lawsuit, monetary loss, reputation damage, and more.
Breaches of Professional Duty
While the TPB only mandates PI insurance for BAS agents, it’s advised that anyone in financial management, including tax advisors and bookkeepers, carry it. This is because your actions are directly related to the financial stability and security of your clients. At any time, they could face a negative consequence as a result of your action or inaction.
Examples of ways you could breach your professional duty include:
What does this look like for bookkeepers? When you have direct access to and control over someone’s accounts, that responsibility is major. The risk factors you incur include, but are not limited to:
- Providing incorrect financial advice
- Making an error in a journal entry
- Performing an error on financial statements
- Failing to provide the expert services you promised
- Rendering those services negligently or unprofessionally
- Lodging documentation too late
If any of these instances happen and your client suffers as a result, PI cover can indemnify you from carrying the financial responsibility of those losses. This means your insurance policy would provide the funds necessary to cover them, along with any legal costs required to defend the claims and ascertain liability.
Thus, whether you need PI insurance to comply with legislative requirements or you simply want it for risk management purposes, it’s a smart move. Investing in a policy can help protect your bookkeeping business against financial and operational risk.
What is Public Liability Insurance?
While PI insurance helps protect your business against lawsuits following professional services or advice, public liability insurance works a little differently.
This type of coverage is required to protect your business against any type of damages suffered by a third party while visiting your office. In addition to personal injury, this also includes property damage to your structure, as well as legal fees required to represent your business in a lawsuit.
A few examples of personal injury cover include:
- Bodily injury
- Mental injury
- Sickness or disease
- Shock or fright
- False arrest
- Wrongful eviction
- Libel or slander
Examples of property damage cover include:
- Physical loss of property
- Physical destruction of property
- The loss of use of tangible property
These types of unforeseen accidents aren’t related to the services you provide. In fact, they can occur anywhere on your property, to both members of the general public as well as business partners, clients, subcontractors and more. Public liability insurance covers your obligation to pay for the injured party’s damages, as well as the sky-high legal fees associated with lawful claims.
Why Do I Need It?
To understand why public liability insurance is so important, let’s take a look at a few examples of why you might need it.
Say you’re working on the year-end accounts for a client. They come in to pick up their documents and while they’re in the bathroom, they slip on a wet floor. Or, maybe you’re setting up a cloud accounting system for someone and they trip on a cable in your office.
In either case, you didn’t necessarily breach your professional duty. You didn’t enter a field incorrectly or file a report too late. Still, the person experienced an injury while in or around your building, and it could be costly to treat.
Would your bookkeeping business have the cash flow required to cover hospital bills, doctor’s visits, and outpatient therapy visits?
Now, consider the issue of property damage.
What would happen if you hired a painter to spruce up your office and they spilled a bucket of paint all over your expensive video teleconferencing equipment? Or, what if a plumber broke a pipe and water leaked right into your office?
Not only would you lose money on replacing the gear, but if you work as a freelancer reliant on technology to connect with clients, you might even have to cease operations for a short while until you could get back up and running again. Could you withstand that kind of financial setback on your own?
With public liability insurance, you can rest assured that the bills won’t fall completely on your shoulders. This type of cover can help shield your business from myriad costs incurred after an accident, from initial first-aid expenses to final claim settlement costs.
How to Get Bookkeepers Professional Liability and Public Liability Insurance
Now that we’ve covered a few of the different types of insurance for bookkeepers available, let’s take a look at how our team works and the way our simple online quote system operates.
Covering more than 2,000 occupations (including yours), our team is well-versed in all types of insurance and can provide a comprehensive solution that makes it easy to get the cover you need.
For bookkeepers considering public liability insurance, we offer a choice of four different levels of cover, including:
- $5 million
- $10 million
- $20 million
- $30 million
We also offer a few levels of PI insurance cover, including:
- $1 million to $20 million can be selected
With flexible payment options, including plans that allow you to pay by the month, we’re here to make this decision an easy and effortless one for you. When you fill out this form, we’ll learn a little more about your business and can help guide you on the type of insurance and level of cover you need.
There is no one-size-fits-all answer for the amount of public liability or PI insurance you might need. Every bookkeeping business is unique, and in some cases, you might be bound to a specific amount prescribed within a formal contract or agreement. We’ll work through those details together and make sure your plan meets your business requirements.
Find Bookkeeping Insurance Solutions Today
Your reputation and bottom line both hinge on your ability to financially support your bookkeeping business and keep it afloat, even through times of trial and setback. This is why liability insurance is so important.
Whether you’re a BAS agent required by law to obtain PI cover or a freelance bookkeeper just getting into the industry, we’ve got you covered. We’ve been in the Australian insurance industry for 20 years, and our team of brokers is passionate about providing direct, personalised service.
We offer a range of insurance options, including public liability insurance, bookkeepers professional liability insurance, and management liability insurance. Get in touch today to learn more about the services we provide and how we can help.
The information contained in this article is meant as a hypothetical guide only. Grace Insurance does not accept any liability arising out of any reliance on the information in this article. We urge you to consult your insurance broker for personal advise, as we only provided general advise.