Bookkeeping is a low drama profession with a specific and unforgiving claim: a figure that was wrong, or a deadline that was missed, and a client who paid a penalty because of it. That is a professional indemnity claim, and it is what the practice is really insuring against.
The claims bookkeepers face
Three recur. A filing deadline missed, producing a penalty the client wants back. A reconciliation or VAT treatment wrong, producing an assessment. And a payroll error, producing underpaid staff or an incorrect submission. None involves injury or damage, so public liability has nothing to say about them. Professional indemnity is the operative cover, and the limit should reflect the size of the penalties and corrections a client might face rather than the size of the fee you charged.
Supervisory bodies and the requirement to insure
Bookkeepers in practice are supervised for anti money laundering purposes, whether by a professional body or directly, and the professional bodies commonly require members in practice to hold professional indemnity at a stated minimum. Where a bookkeeper is supervised by a body, the requirement is a condition of the practising licence, which makes it an operating requirement rather than a commercial choice.
Payroll, money movement and the crime question
Running a payroll or making payments on a client's behalf moves a bookkeeper closer to their client's money, and that changes the risk. Fraudulent payment instructions arriving by email are a well known route into small practices, and the loss falls under cyber and crime cover rather than under indemnity. Where a practice holds client money at all, the professional body's client money rules apply and are usually stricter than anything an insurer asks for.
Working from home, and the cover that assumes you do not
Most independent bookkeepers work from home. A household policy generally excludes business use, so business equipment and any client records held at home may be uninsured under it. Clients visiting the property raises a public liability question. Neither is expensive to solve, and both are routinely left unsolved because the practice feels domestic even when the work is not.
Questions people ask about bookkeeping insurance
Does a bookkeeper need professional indemnity?
In practice yes, and usually as a condition of a professional body licence. The claim this trade faces is a wrong figure or a missed deadline, which only indemnity answers.
Is a client's HMRC penalty covered?
Where it results from your error and the policy responds, the claim is for the client's loss. Wordings differ on fines and penalties, so read that clause specifically.
Do I need cover working from home?
Household policies usually exclude business use, so equipment, records and any client visits need to be covered by a business policy.