Do Accountants Really Need Professional Indemnity Insurance?

Finally, if you have any questions, please contact your Lockton account manager for further advice or email accountants@uk.lockton.com.

• Check if your business needs Professional Indemnity insurance as mandated by your professional body.
• Review client contracts, as they often specify minimum insurance levels for Public Liability.
• Assess the value of assets and potential business interruption to determine adequate property insurance.
• Consider Cyber Liability insurance, increasingly required in contracts for handling client data.

Lockton is ACCA’s recommended broker for professional indemnity insurance. Specialist insurance for accountants from £5 a month* Fast, easy online quote in 90 seconds Fast, easy online quote in 90 seconds Accountant insurance covers a great deal of risks that could face you and your business, but from professional indemnity insurance through to employers’ liability insurance policies and more – Markel have you covered.

About Apex Insurance Brokers

Registered in England and Wales, Companies House number 07014570. This guide is technical reference material, not regulated advice. Professional indemnity cover for the period after a practitioner ceases to practise is becoming harder to find As you are probably aware, ACCA requires that members who cease to practise or are about to retire maintain professional indemnity (PI) cover for a six year 'run-off' period. This cover provides protection should any claims arise from work done before the practice was wound up. ACCA is hearing from an increasing number of members who are struggling to obtain suitable run-off insurance.

Office Break In and Equipment Loss

Ordinarily, run-off cover is arranged in one of two ways: by setting up a six-year block policy, which is paid for in advance by setting up an annual policy, which is then renewed each year for six years. Traditionally, run-off insurance can only be arranged with the insurer who provided the PI cover while the practice was trading. Very few insurers, if any, will now consider providing run-offer cover for a risk that had been held insured with another underwriter prior to retirement/cessation. Moreover, any insurer will also require to have held the risk for at least two years before they will even consider providing a six-year block of cover. With few options available previously, the process is now even further fraught with difficulties, due largely to the prevailing hard market conditions for PI generally. Accountants insurance is an important form of business insurance designed to protect your business against the unexpected.

Frequently asked questions

You comply with the highest applicable standard. ICAEW's formula is usually higher than CIOT's at the firm sizes where this is a live question. Can I take a higher excess to reduce premium? Your regulator caps the excess (ICAEW: lower of £30k per principal or 3% of gross fees; ACCA: 2% of gross fees). Within that ceiling, you can negotiate — but the arithmetic of premium saving versus self-insurance retention rarely favours sole practitioners.

1.1 Statutory and quasi-statutory roles

Does R&D advisory get treated differently? Underwriters now scrutinise R&D advisory specifically, often impose sub-limits, exclude contingent-fee work, or rate it heavily. Disclose accurately at renewal — non-disclosure voids the cover for an R&D claim. No — fines and penalties imposed on the firm are uninsurable as a matter of UK public policy. FRC defence costs and investigation costs are typically insurable, and these are often the larger figure. It’s worth noting that it’s not a single product, but rather a group of covers that can be tailored to suit you and your business needs.

Why Professional Indemnity Insurance Matters for Accountants

Some insurers and managing general agents (MGAs) have withdrawn from the PI market for accountants completely, while others are reducing their overall exposure to risk and so are no longer able to offer the six-year run-off blocks of cover. Similarly, seeking to curtail their exposure, insurers may only provide minimum limits of indemnity or restrict cover further by providing a single total limit on aggregated basis over the period of cover. All of this means that retiring accountants have a real problem effecting appropriate run-off cover. By way of a troubling example, we were contacted recently by a retired accountant, who had purchased an annually renewable run-off policy with an MGA on which a claim had been made. Unfortunately, the accountant had been late in returning the renewal forms and the MGA simply declined to renew the policy.

Pro Members – £300k Cover

In another instance, also involving an MGA, annual cover could not be renewed because the MGA simply withdrew from the professional indemnity market completely. We have received several such requests to place run-off cover midway through the six-year period when insurers depart the scene. While we are obviously happy to help, you must be aware that there are very few insurers available to assist at the present time. As such, when you are contemplating retirement or cessation of practice, you must also consider the importance of addressing the continuing need for PI cover and be sure that it is placed properly. We therefore recommend that in the year or so you before you intend to close down or sell your practice, you must ensure that your PI cover is placed with a stable, A-rated insurer and that you engage the services of a specialist PI insurance broker such bet best free bet no deposit uk as Lockton to assist you with the vagrancies of the PI market. It can protect you against the costs involved in defending allegations of professional negligence (such as making a mistake in a piece of work), causing injury to a third party, or damage to vital equipment (or property) you use for business.

• Fines for non-compliance with Employers' Liability insurance are enforced by the Health and Safety Executive (HSE).
• Operating without required motor insurance can lead to vehicle seizure, fines, and penalty points.
• Breaching contractually agreed insurance levels can lead to contract termination and legal claims.
• Operating without mandated Professional Indemnity can result in disciplinary action from your regulatory body.
• Inadequate insurance can lead to personal liability for directors if the company cannot cover claims.

Covers such as bookkeepers’ insurance for instance, will protect you allegations of poor or incorrect bookkeeping, or the theft of a laptop containing important and confidential client data.

• Insurance requirements can be stipulated in the Articles of Association for limited companies.
• Shareholders' agreements may mandate specific Directors' and Officers' Liability cover levels.
• Bank loans or financing agreements often require asset and key person insurance as collateral.
• Landlord lease agreements frequently require tenants to have Public Liability insurance.

Even with many years' experience in accountancy, an unexpected circumstance could see a claim brought against you. For instance a client could claim that you have breached their confidentiality, while another might suffer an injury at your premises and hold you responsible.

What affects your premium?

Read more on the Apex team page. About Apex Insurance Brokers Ltd Apex Insurance Brokers Ltd is a UK commercial insurance broker based in Bristol, specialising in Professional Indemnity for accountants, solicitors, surveyors and the wider professional-services sector. We are authorised and regulated by the Financial Conduct Authority — FRN 724952. Registered in England and Wales — Companies bet best betting sites for new customers House 07014570. Registered office: details available on our About page.

Covering past work – what is Retroactive PI Cover?

Always read it alongside the current published rules of your accountancy body and your individual policy wording. Professional Indemnity placement should be undertaken with a broker authorised under the FCA's Insurance Distribution rules. The next scheduled review is November 2026. Apex Insurance Brokers Ltd. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Without comprehensive accounting insurance in place, your business could struggle to survive such claims.

How are claims from former clients treated?

Can I place PI outside the ICAEW Participating Insurer list? Cheaper non-participating quotes are typically bet sports betting offers uk not a permitted alternative under ICAEW PII Regulations. What happens if my PI insurer fails? PI policies written by UK-authorised insurers benefit from FSCS protection (currently 90% of the claim without limit for compulsory insurance, and 90% of claim without limit for PI for individuals and small businesses for professional indemnity claims). Always confirm FSCS eligibility for your specific cover.

11.1 The mathematics of "2.5 × fees"

I'm retiring and selling my practice — does the buyer's PI cover my prior work? Only if the buyer's PI is structured to take over prior-acts liability, which is a specific clause that must be negotiated. The default is that you continue to need run-off cover. Sale price negotiations should include who funds the run-off. Author: Apex Insurance Brokers Ltd — written by the Apex commercial broking team. Other unexpected circumstances, such as the theft of computer equipment, or a fire or flood at your business premises, could be financially damaging for your business.

Professional indemnity insurance for accountants

What is a Liability Limitation Agreement (LLA)? An LLA is permitted under s.534-538 of the Companies Act 2006 and allows an audit client and auditor to agree a cap on auditor liability for one financial year. It must be shareholder-approved, "fair and reasonable" and disclosed. Common on private audits, rare on listed. Do I need both Fee Protection (Tax Investigation) Insurance and PI?

16.1 The minimum-premium floor

Fee Protection pays the professional fees of running an HMRC enquiry. PI pays damages where the practitioner's work was negligent. They are complementary; neither replaces the other. Modern PI usually covers the liability arising from a cyber-driven failure of professional services. It does not typically cover ransom, system rebuild, business interruption or notification costs — those need a standalone cyber policy. Accounting business insurance can protect you and make the difference. Most accountancy associations (including the ACCA, AAT, CIMA and ICAS) require members to hold a minimum level of accountants’ professional indemnity insurance to protect you if a client alleges you have made a mistake in your work - such as not filing their accounts on time, making an error in a VAT return or providing poor advice in relation to a self-assessment.

Our specialist accountants’ insurance can be tailored to provide cover however you need it, as well as giving you complementary access to a 24-hour legal advice helpline and legal hub for any business-related legal issues.

Access specialist business services as part of your policy cover

Should you be considering the sale of your practice, you also must give due consideration to run-off cover. Again, Lockton can readily assist you (or the potential buyer) with this to ensure that past liabilities can be protected appropriately. Finally, and by way of immediate comfort to those accountants who are considering retiring from ongoing practices, there is better news: their past liability should continue to be covered by the firm’s PI policy on an ongoing basis. Often after retirement, many accountants continue to practise as consultants to the firm and the majority of PI policies will continue to provide cover for such work. Nevertheless, in each scenario, we strongly suggest that the policy wording be reviewed to make sure that cover is correctly in place; again, Lockton can help with this. Professional indemnity insurance for accountants covers the cost of defending your business against allegations of professional negligence (such as giving your client incorrect or wrongful advice).