Do I need professional liability insurance?
The AICPA recommends that all accounting firms carry professional liability insurance. Today, clients sue more frequently for an increasing number of reasons. Many lawsuits arise not only from errors and omissions, but from the failure to fulfill client expectations and attempts by clients to recoup financial losses. Even if you did nothing wrong, the cost of legal defense alone could be a source of financial hardship. The disruption to your practice could reduce your billable time, and possibly expose your personal assets. If you secure the appropriate professional liability insurance, you can better protect your accounting firm from the time and expense of addressing claims and lawsuits filed against your firm.
Most of my practice is tax return preparation. How much risk does that have?
Significant. Claim experience in the AICPA program indicates that tax engagements are the leading cause of professional liability lawsuits filed against CPAs. Defense attorney fees, court costs, and settlement amounts can quickly add up and affect the financial stability of small to mid-sized firms.
What services are covered by the Mid-Sized Firm Plan?
The Mid-Sized Firm Plan covers a broad range of accounting and consulting services. These include tax planning and preparation, audit and other attest services, general accounting services, SEC engagements, computer hardware and software services, business advice, personal financial planning, litigation support and expert witness testimony, management consulting services and more.
What is Claims-made Insurance?
Under a claims-made policy, your coverage is provided for claims made against you and reported to the insurance company while the policy remains in force and during any applicable extended reporting period.
How can I save money on my insurance?
With the Mid-Sized Firm Plan, you can reduce your costs by taking a proactive approach to managing your professional liability risks. Premium savings are available to members of the Private Companies Practice Section (PCPS) and AICPA Audit Quality Centers. Additionally, firms can reduce their costs with engagement letter use, peer review, claims free status and risk control training programs. For more detailed information, visit our premium savings webpage.
How important is the rating of your insurance carrier?
Extremely! A.M. Best's Financial Strength Ratings provide an independent third-party evaluation to help determine the ability of an insurer to fulfill its financial obligations regarding life, homeowners and other insurance products to you ― the policyholder. The company’s rating process subjects all insurers to the same rigorous criteria, providing a valuable benchmark for comparing insurers. An A (Excellent) rating is assigned to companies that have, in A. M. Best’s opinion, an excellent ability to meet their ongoing insurance obligations.
What is the difference between E&O and PL Insurance?
Errors and Omissions (E&O) insurance is also known as professional liability insurance. It insures firms and individuals against financial loss resulting from acts, errors or omissions in their performance of professional services. Common claims allege negligence, misrepresentation, design errors, violation of good faith and fair dealing, and inaccurate advice.
Who is the Mid-Sized Firm Plan’s underwriter?
The Mid-Sized Firm Plan is underwritten by a CNA member company. CNA has been providing insurance for over 100 years and is the largest underwriter of accountants professional liability insurance in the United States. CNA has a staff of experienced claims and risk control professionals, including attorneys and CPAs, dedicated to serving the accounting profession and ready to manage your claims expeditiously and fairly. CNA is rated A (Excellent) by A.M. Best Company, a leading national rating service for the insurance industry. The company also offers a large portfolio of risk control resources that help you better understand and mitigate your exposure.
Does the AICPA endorse this plan?
Yes. In fact, the Mid-Sized Firm is part of the AICPA │ Aon Professional Liability Program. The Mid-Sized Firm Plan is continuously monitored by a committee of AICPA members in public practice to ensure that it meets the ever-changing needs of CPAs. This means you receive the coverage and service that have made the AICPA Program so highly regarded, but at a substantial savings for smaller firms.
If I have insurance, will there be an interruption in coverage if I switch to the Mid-Sized Firm Plan?
No. If you apply and are approved before your current policy expiration date, then you don't have to worry about having a period without coverage when you switch to the Mid-Sized Firm Plan. The available prior acts provision affords coverage for claims filed during your policy period, even if the incident occurred before your policy effective date, provided you had no knowledge of the incident. Simply stated, this means that once you're insured with the Mid-Sized Firm Plan and you cancel your current coverage, the prior acts clause will give you uninterrupted coverage.
If my firm increases our staff or billings, will I lose my coverage?
No. The Mid-Sized Firm Plan is designed to adapt to your evolving business needs, allowing you to start with basic coverage and choose from plan options that make sense as your firm grows, takes on new areas of practice, staff sizes, and business plans.
Why should I add the Employee Theft endorsement?
The Employee Theft endorsement provides coverage for financial loss due to the fraudulent activities of an employee or group of employees. The loss can be the result of the employee’s theft of money, securities, or other property belonging to the employer or a third party such as a client. Employee theft can go on for years before it is discovered, resulting in losses that can bankrupt a business. Adding the Employee Theft endorsement to your existing AICPA │ Aon Professional Liability Program policy represents an affordable means of helping to reduce your exposures and ensure peace of mind.
If I have a question about the Mid-Size Firm Plan, what should I do?
As the AICPA │ Aon Professional Liability Program Administrator, Aon Insurance Services has a staff of knowledgeable service representatives available to help you with coverage questions or any other Plan concerns. You can either e-mail us or call us toll-free at 1-800-221-3023.
Click here for IMPORTANT product disclosure information