If you are trading as a book-keeper in the UK,
it is advisable to buy Professional Indemnity Insurance (PII). This form of insurance protects you against legal action made by your clients if you make any mistakes.
PII is available from a range of insurers. The average annual cost for a book-keeper should be around £150 to £200, and you should have the option of paying for this monthly if required.
PII provides essential financial protection for book-keepers and accountants. In the event that a client suffers financial loss as a result of alleged negligence, error or omission a Professional Indemnity policy will meet the cost of defending claims and any damages payable.
Any person who gives advice, designs, or offers similar services in a professional capacity is seen by clients as an expert. In these times of high consumer awareness, clients will not hesitate to pursue a claim if they feel they have received sub-standard advice or service. The need for Professional Indemnity Insurance has never been greater.
Court awards against accountants are on the increase, so it is important that an adequate limit of indemnity is chosen to guard against major financial loss, which will not only have an impact on your business, but could also affect the professional’s personal assets
The circumstances below are typical of the claims currently being made against accountants:
A client purchased a company based on accounts that had been approved by the insured. The client then alleged that the accounts did not show the true financial position of the company.
Amount Paid £4,000,000
The insured failed to identify serious embezzlement while acting as auditors for a client.
Amount Paid £4,000,000
The insured advised a client regarding the transfer of funds to members of the family. The client became liable for capital gains tax.
Amount Paid £1,510,000
While undertaking an audit, the insured failed to detect a major fraud.
Amount Paid £950,000
The insured provided advice to clients regarding their exposure to Capital Gains Tax following the sale of the client's business. The advice is alleged to have been negligent.
Amount Paid £600,000
The insured failed to meet the requirements of the Companies Act when dealing with the issue of shares.
Amount Paid £525,000
A partner of the insured misappropriated money from client accounts.
Amount Paid £500,000