Dealing with lawsuits that arise because of accounting and bookkeeping mistakes can be extremely expensive when handled alone. Professional Liability insurance, or Errors and Omissions (E&O), makes it so you don’t have to. If a client brings legal action against your firm and claims that you made mistakes which cost them financially, accountants professional liability is there to help protect you legally and financially.
If, for example, your firm relocates its office and fails to notify an insurance company who holds a living trust policy that you are the trustee for, the insurance company may cancel your client’s policy. The client may then sue your firm because they must pay high premiums on a new policy. Likewise, the heirs of an estate may sue your firm for fines and fees that arise due to you allegedly not filing the estate tax forms on time. Without accountants professional liability insurance, your firm will spend time, money and resources dealing with these claims-regardless of whether your firm is actually at fault.
Accountants professional liability can pay for the cost of your legal defense. Depending upon the scope of your policy E&O may also pay the client’s settlement or award, and pay for your losses in income while in court.