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What Does a Chartered Accountant’s Professional Indemnity Insurance Cover?

Posted on 29 August, 2022

If you are a Chartered Accountant in India, Professional Indemnity Insurance is necessary. It protects you from any financial losses or damages that may occur due to your professional activities.

Professional Indemnity Insurance for Chartered Accountants covers you for any advice that you give that your client considers negligent or for any errors or omissions in your professional work. It is essential to have this type of insurance in place to be protected financially if your client sues you for damages when your services cause them financial loss.

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Why Must Chartered Accountants Get Professional Indemnity Insurance?

A Chartered Accountant is a professional who provides financial and accounting services to clients. They may work in public practice, industry or commerce, or the public sector.

Chartered Accountants need Professional Indemnity Insurance to protect themselves from claims arising from their professional activities. Professional indemnity insurance can cover damages awarded against the insured and legal costs incurred in defending a claim.

Professional indemnity insurance is not compulsory for Chartered Accountants in India but strongly recommended. Many clients will require their Chartered Accountant to have Professional Indemnity Insurance before engaging their services.

Chartered Accountants who do not have Professional Indemnity Insurance may find it challenging to obtain new clients and may risk losing their professional licence if they are found liable for damages arising from their professional activities.

What to Expect from Professional Indemnity Insurance for Chartered Accountants?

1. Financial Protection Against Claims

Professional indemnity insurance can provide financial protection against claims made by clients or third parties. It can help cover the cost of legal fees and any damages awarded.

2. Peace of Mind

Having Professional Indemnity Insurance can provide peace of mind in knowing that you are protected against any potential claims. It can allow you to focus on your work and business without worrying about the financial implications of a claim.

3. Enhanced Reputation

Professional indemnity insurance can enhance the reputation of your business. It shows that you are committed to protecting your clients and takes steps to minimise the risk of any claims being made against you.

4. Abundant Business Opportunities

Many businesses will only work with other companies with Professional Indemnity Insurance in place. Having this type of insurance can open up new business opportunities.

5. Improved Client Relationships

Professional indemnity insurance can help strengthen relationships with clients. They will know that you are taking steps to protect them financially if anything goes wrong.

What is the Scope of Cover Under the Professional Indemnity Insurance for Chartered Accountants?

The Professional Indemnity Insurance for Chartered Accountants in India provides financial protection against losses arising from professional negligence or errors committed by Chartered Accountants.

It covers legal liabilities incurred by the insured party and any expenses related to defending against a claim. This type of insurance is vital for Chartered Accountants who want to protect themselves financially if their clients sue them for professional negligence.

The Coverage includes:

  • Coverage for civil liability arising from any negligent act, error or omission committed by the policyholder in the course of their professional duties

  • Protection against claims from clients for losses arising from professional advice or services that you provided

  • Coverage for expenses related to defending against a claim, including court costs and attorney’s fees

The scope of cover under a Professional Indemnity Insurance for Chartered Accountants policy can vary depending on the insurance company, so it is essential to read the policy wording carefully to understand what is and isn’t covered. However, most policies will provide cover for:

1. Financial Loss

It protects you against claims of monetary losses suffered by your client as a result of your professional negligence

2. Loss of documents or data

This Coverage helps when the third-party claims that they have suffered financial loss due to the Chartered Accountant losing or compromising their documents or data

3. Breach of Contract

This type of coverage protects the Chartered Accountant from any damages awarded to a client as a result of the Chartered Accountant breaching the terms of their contract

4. Libel and Slander

This type of coverage protects the Chartered Accountant from any libel or slander claims brought against them by a client

This type of coverage protects the Chartered Accountant from any libel or slander claims brought against them by a client

It helps when a client claims that the Chartered Accountant is in breach of an intellectual property right

To Conclude

Professional indemnity insurance is the best way to protect your business against risks. It can provide you with peace of mind if something goes wrong.

While it’s not mandatory to have Professional Indemnity Insurance, it is strongly recommended. It is because it can provide you with financial protection if you’re sued for professional negligence.

Now that you know the coverages under Professional Indemnity Insurance for Chartered Accountants, it’s time to take action and get covered.

  • Professional Indemnity for Chartered Accountants
  • Product Code: 4024
  • Product UIN: IRDAN115CP0024V01201920

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This contains only an indication of the cover offered. For complete details on risk factors, terms, conditions, coverages and exclusions, please read the sales brochure carefully before concluding a sale.ICICI trade logo displayed above belongs to ICICI Bank and is used by ICICI Lombard GIC Ltd. under license and Lombard logo belongs to ICICI Lombard GIC Ltd. ICICI Lombard General Insurance Company Limited, ICICI Lombard House, 414, Veer Savarkar Marg, Prabhadevi, Mumbai – 400025. . IRDA Reg.No.115. Toll Free 1800 2666. Fax No – 022 61961323. CIN (L67200MH2000PLC129408). customersupport@iciclombard.com. www.icicilombard.com. (Workman Compensation, 4010 , IRDAN115P0010V01200607)