While in one sense insurance is designed to help protect you from the unexpected, you are only protected if your policy ‘expects’ the claim being made against it. In other words, insurance should evolve with your business. For accounting businesses, this principle comes into play more often than you might think.
Speaking broadly, organisations and practitioners should review their insurance whenever their circumstances change. Here are a few specific events that should prompt you to confirm you’re covered.
1. When you undertake a new type of work
Signing a new client usually results in a jolt of excitement followed by a flurry of hard work. In between those two things, it’s important to verify that the work is within the scope of your insurance. For example, if a client wants you to handle executor services, most accountants will find their basic professional indemnity (PI) policy doesn’t cover that.
Beyond letting your insurer know the business activities you’re undertaking; you should also check to see if the limits of your indemnity (the sum insured) are adequate. Do you have different obligations due to newly relevant regulations or the wording of the contract? Is your business now large enough with the new client that a new limit is warranted?
If you’re not certain about something, it’s important to talk to your broker promptly. While it may be possible to get coverage for work you’ve already done, that is not the case if a claim is made against you first.
2. When a business changes or merges
If you sell your business, you may assume you can just sign over your coverage and be done with it. Similarly, if you retire it seems like the last thing you should be worried about is PI insurance. However, making those assumptions could possibly leave you exposed should a claim be made against you for historical work. This is where run-off cover is important.
This feature is designed to cover you for PI claims even after you’re no longer in business or working. Because PI is a ‘claims-made’ policy, the policy must be active at the moment a claim is made. Given that accounting advice can have financial impacts years down the track, it’s crucial to be protected from legal action in the longer term.
Another business change that should prompt an insurance review is moving into a distinct type of work, such as financial planning.
3. When you’re doing a ‘once-off ’
The trickiest ‘set and forget’ mistake is probably when you undertake work for a client that you wouldn’t ordinarily engage in. Doing them a favour can be smart business – after all you want to show clients you’re there for them – but it can turn sour should that work fall outside the scope of your insurance and a claim is made. So, even if work feels like a once-off , check that it’s covered.
To help you review and renew your insurance, you want an insurance broker you can trust. As a broker and chartered accountants insurance specialist, Aon helps you find a policy customised for the common risks of your industry. They’re trained to ask the right questions about your business and its work. They understand that your business evolves and that your policies should evolve with it. As Aon likes to say, don’t just insure, be sure.
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Aon is the Australian general insurance partner of the CA ANZ Member Benefits Program and provides exclusive benefits to CA ANZ members. To fi nd out more and get a quote, visit aon.com.au/ca.
© 2022 Aon Risk Services Australia Limited ABN 17 000 434 720 AFSL 241141 (Aon) This information is intended to provide general insurance related information only. It is not intended to be comprehensive, nor does it, or should it (under any circumstances) be construed as constituting legal advice. You should seek independent legal or other professional advice before acting or relying on any of the content of this information. Aon will not be responsible for any loss, damage, cost or expense you or anyone else incurs in reliance on or use of any information contained in this document.