An accountancy practice is insured against being wrong rather than against being unlucky. The claim is almost never physical, which means the cover that matters is professional indemnity and the limit is usually not the practice's own decision.
The institute sets the floor
Practising certificate holders with the chartered and certified bodies are required to hold professional indemnity at a minimum level set by their institute's regulations, usually expressed as a multiple of fee income with a stated minimum and a cap. The regulations also commonly specify the maximum excess and require cover with an approved insurer. This makes the buying decision unusual: the floor comes from the regulator of the profession, and the practice's own judgement operates above it rather than below.
Claims made, and why the date of the work does not matter
Professional indemnity is written on a claims made basis. The policy that responds is the one in force when the claim is made, not the one in force when the return was filed. That is why a practice must keep cover continuously, why the retroactive date on the schedule is worth reading, and why a gap in cover retrospectively strips protection from years of completed work that was insured at the time it was done.
Run off after the practice stops
Because claims arrive late, a practice that closes, merges or is sold needs run off cover for the years afterwards, and institute rules normally set a minimum period. This is the cost most often forgotten in a succession plan, and it falls on the retiring principal rather than on the buyer unless the sale agreement says otherwise. Buying it as a single premium at closure is usually far more expensive than the annual premium was, so it belongs in the exit arithmetic from the start.
What sits beside indemnity
Public liability covers a client injured at your office, which is a small exposure for most practices and a required one if clients visit. Employers' liability applies from the first member of staff. Cyber matters more for accountancy than for many professions, because a practice holds client financial data, has payment instructions passing through its mailbox, and is a known target for invoice redirection fraud, which is a cyber and crime question rather than an indemnity one.
Questions people ask about accountant insurance
What professional indemnity limit does an accountant need?
The institute's regulations set the minimum, usually as a multiple of fee income with a floor and a cap. Client contracts can require more, never less.
Why does a closed practice still need insurance?
Because professional indemnity responds when a claim is made. After closure, run off cover is what answers claims about completed work, and institute rules normally set a minimum period.
Is invoice fraud a professional indemnity claim?
Usually not. Money taken through a redirected payment or a compromised mailbox is a cyber and crime exposure and needs those sections rather than indemnity.