As an accountant, you deal with numbers all day, everyday. You've made a career out of it. So, when you face budget cuts and financial decisions, you probably feel well equipped to handle it with ease. That's likely the case, you are a professional, after all.
But, there is one common mistake accountants make when making financial cuts. Most accountants don't see the true value in professional liability insurance, and it's often one of the first things cut when budgets need to be tightened. That's because it's easy to miss this type of insurance's value.
After all, professional liability insurance is not something you see results for on a day-to-day basis. So, it can be challenging to correctly evaluate its benefits and weigh out whether it's worth the price you pay for it.
Below, we'll walk you through five reasons why obtaining and keeping professional liability insurance as an accountant is worth the cost and why it should not be placed on the chopping block.
It Creates Credibility With Clients
Your clients put a lot of trust in you. You look through and manage their finances, which means you hold the most important part of their business in your hands. It's only natural your clients want to know they are protected in case mistakes are made.
As much as we'd all love to believe it isn't true, the cold harsh reality is even the best accountants make mistakes from time to time. Of course, you hope these mistakes are caught in time, or they cause minimal damage when completely missed, but that's not always the case.
Your clients will feel more secure, and more trusting of you, if you have professional liability insurance in place in the event the worst happens.
If you make a mistake that costs your client money, they will likely file a suit against you. Lawsuits are never cheap for either party, but professional liability insurance is there to protect both parties. If your client is right, and a mistake was made, your professional liability insurance can help them recoup their losses.
Knowing a safety net is in place will give your clients peace of mind you simply can't give without it. And, knowing you've prepared for such mistakes will help them see you as a professional, responsible accountant they can trust.
Professional Liability Insurance and Risk Management Services
Several insurance companies that offer professional liability coverage also provide risk management services for their insureds. This is a wonderful addition to professional liability insurance because it serves you continuously and not just when you are facing a claim or lawsuit.
This service provides you with quality advice and opinions from professionals who make lowering your risk their business. Risk management services will help you increase your knowledge about common liabilities, and give you the tools to help you reduce and avoid them whenever possible. After all, the more you know, the better prepared you are to catch a mistake before it's made.
Access to risk management tools is one of the greatest aspects about professional liability insurance, because it serves to prevent problems before they start. And we all know, if possible, prevention is the best way to deal with complications.
It Minimizes the Costs of Claims
As we mentioned before, even the best accountants make mistakes from time to time. One simple miscalculation can cause things to go south very quickly. That one mistake could wind up costing thousands of dollars to fix.
If you are without insurance, you are without protection from these costs. And you, or your firm, will have to pay out of pocket for your mistakes. This could cause extreme financial trauma and great amounts of stress for you and everyone involved.
But, if you are protected by professional liability insurance, you have a safety net to fall into. Your insurance will minimize the costs to you and save you from large financial setbacks. With professional liability insurance, your mind can be at peace, knowing that you're protected in both court and settlement costs.
Professional Liability Covers Claims of all Sizes
When you think of lawsuits and claims being filed against you, your mind likely conjures up worst case scenarios. You imagine those as the circumstances that would require professional liability insurance. And you'd be right. You definitely need insurance during cases like that. But, professional liability insurance doesn't simply provide help during the huge problems. It's a safety net for you during minor issues too. So, whether you've misplaced a decimal point or made a massive calculation error, you're protected.
Without it You Risk Paying Way More
One of the reasons insurance is the first expense to hit the chopping block is that you don't realize how desperately you need it until you desperately need it. Since it's not an expense that constantly shows rewards or results, it's often overlooked as important. That couldn't be further from the truth.
If you wait until a lawsuit is being filed, and the costs start piling up, to see how beneficial insurance is, it'll be too late. You have to look ahead to the long term when you think about professional liability insurance and its benefits because even a relatively small future lawsuit could cost more than the insurance premiums you pay now. And, a large claim will cost astronomically more.
Professional liability insurance is vitally important to all accountants. It provides you with a safety net that can save you big when if you find yourself ever facing a high-cost lawsuit. And, if the day ever comes where you need to utilize your coverage, you'll be extremely thankful you had it in place.
Knowing you have professional liability insurance at your disposal provides you with peace of mind as you go about your daily tasks. It can be extremely unsettling, knowing your mistakes aren't covered. The pressure of not being covered can put you on edge, and ironically, that's when most mistakes occur.
If you don't have professional liability insurance and would like to learn more about it and our risk management hotline, don't hesitate to contact us today.