QUICK ANSWER
What should an accountant prepare for a professional indemnity proposal?
An accountancy firm should clearly describe its services, annual fee income, largest clients, audit and assurance work, tax, insolvency or corporate-finance activities, jurisdictions, engagement terms, review controls and previous claims or circumstances. Higher-risk services should be identified separately rather than grouped under a generic accountancy description.
AT A GLANCE
How the protection works
A clear accountants professional indemnity proposal should describe the services provided, annual fee income, client profile, largest clients, audit or assurance work, tax services, insolvency or corporate-finance activities, jurisdictions, subcontracted work, claims or circumstances, engagement terms and the controls used to review advice and client work.
Accountants Professional Indemnity Insurance is not one universal contract. Eligibility, limits, retroactive cover and wording vary according to the services performed, professional responsibilities and the individual risk.
FINANCIAL & PROFESSIONAL
What may be covered
- Professional indemnity for insured allegations that accountancy, tax, audit, assurance or other professional services caused financial loss.
- Defence costs and covered settlements arising from insured professional claims, subject to the wording and applicable excess.
- Extensions for particular professional activities or associated risks only where expressly included.
Cover applies only as stated in the quotation, schedule and full policy wording.
BOUNDARIES
Common exclusions and limitations
- Known matters, prior circumstances, deliberate or dishonest conduct and uninsurable penalties.
- Services, territories, contracts or events outside the insured definitions.
- Cyber, professional, crime or management exposures where the required section has not been selected.
This is not a complete list. The actual wording, endorsements, excesses and schedule determine the protection.
CLAIMS IN PRACTICE
How a claim might arise
01. A client alleges that an accounting, tax or reporting error caused additional tax, penalties, financing loss or other financial damage.
02. An audit or assurance client alleges that material information was missed or incorrectly assessed.
03. Advice connected with a transaction, insolvency matter or specialist engagement leads to an allegation that the firm failed to exercise appropriate professional care.
These examples are illustrative only and do not confirm that a particular claim would be covered.
CHOOSING COVER
Questions worth resolving
- Are all accountancy, tax, audit, assurance, insolvency, payroll, bookkeeping and corporate-finance services clearly declared?
- Are annual fee income, largest clients, client sectors, jurisdictions and contractual responsibilities accurately described?
- Can the firm evidence engagement letters, review and sign-off procedures, conflict checks, file controls and previous claims or circumstances?
For wider proposal preparation, see the DIBNI Commercial Insurance Proposal Guide.
CONNECTED RISKS
Related protection to consider
- Property and business interruption where physical damage could stop operations.
- Public, employers’ or product liability for injury and property-damage exposures.
- Cyber, professional indemnity or management liability where data, advice or governance creates additional risk.
- Motor, marine, travel or other specialist protection where the activity requires it.
QUESTIONS
Frequently asked questions
What information should an accountancy firm prepare for a professional indemnity proposal?
Useful information commonly includes services provided, annual fee income, largest clients, client sectors, audit or assurance work, tax and insolvency activities, jurisdictions, subcontracted work, engagement terms and previous claims or circumstances.
Why do engagement letters and review controls matter?
They help define the scope of the accountant’s responsibility and evidence how advice, calculations and client work are checked before delivery.
Why should higher-risk services be identified separately?
Audit, tax planning, corporate finance, insolvency and other specialist services can create different professional exposures and should be described clearly rather than grouped under a generic accountancy label.