Accountancy is one of the professions where the cover is not optional and the terms are not left to the market. A member in practice with one of the chartered bodies is required to hold professional indemnity insurance to that body's own specification, which sets a minimum limit related to income, terms about what the policy must cover, and a run off requirement for firms that close. The buying question is compliance first and price second.
The body sets the floor, not the broker
Each chartered body publishes professional indemnity regulations for members in practice, covering the minimum limit of indemnity, how it relates to fee income, the excess permitted and the conditions the policy has to meet. Those regulations are the specification a firm buys against, and the body can and does check compliance. Reading them directly, rather than a broker's summary, is the correct starting point for any firm arranging or renewing cover.
Run off, because claims arrive after the firm closes
Professional indemnity is claims made, and a tax or audit error can surface years later. The bodies require run off cover for a stated period after a practice ceases, and arranging it at the final renewal with the incumbent insurer is far easier than arranging it afterwards. A sole practitioner planning to retire should raise it a renewal early, not on the last day.
What the cover is actually answering for
The realistic claims are a missed filing deadline and its penalties, a tax position that did not hold, a set of accounts prepared on a wrong basis, and advice on a transaction that cost the client money. All of those are financial losses rather than physical ones, which is exactly the ground professional indemnity occupies and public liability does not. Defence costs are a large share of the bill and their treatment inside or outside the limit is worth checking.
The rest of an accountancy firm's schedule
Public liability for visitors and client site visits, employers' liability once anybody is employed, office contents, and cyber, which matters more here than in most professions because a practice holds client financial data and is a target for payment redirection fraud. Firms in scope for money laundering supervision have registration obligations that sit beside all of this and are not insurance.
Questions people ask about accountants professional liability insurance
Do accountants have to have professional indemnity insurance?
Members in practice with the chartered bodies are required to hold it to their body's own specification, which sets minimum limits related to fee income and the terms the policy must meet. It is a regulatory requirement rather than a commercial choice.
How much cover does an accountancy practice need?
The professional body's regulations set the minimum, normally as a multiple of fee income subject to a floor. Client contracts and the practice's own risk appetite may push it higher, and defence costs treatment affects how much the limit really buys.
What is run off cover for accountants?
Cover kept in force after a practice ceases so that claims about earlier work still meet a live policy. The professional bodies require it for a stated period, and it is easier and cheaper to arrange at the last renewal than after closing.
Does the policy cover a missed filing deadline?
A penalty caused by a negligent failure to file on time is the classic professional indemnity claim for an accountancy practice, subject to the policy terms. The cover answers for the liability to the client rather than for the firm's own fines.