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How Does Professional Indemnity Insurance for Chartered Accountants Work?

Posted on 22 April, 2022
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One of the many roles of a chartered accountant or an accountancy firm is to advise its clients regarding taxation, financial investment, audit, etc. Occasionally, Chartered Accountants or the firms they work for can make errors despite their best efforts due to the nature of the work.

When the client is financially affected due to losses incurred due to such errors or apparent negligence, they will look to recoup their losses from the people responsible. One of the means available to the client is to sue the chartered accountant or the firm for damages.

Professional Indemnity Insurance for Chartered Accountants

A lawsuit can be painfully expensive and could cause significant financial loss for the defendant. To prevent such situations from arising, a Chartered Accountancy firm can buy professional indemnity insurance for Chartered Accountants.

Professional indemnity insurance for Chartered Accountants in India compensates for all the costs incurred by the insured party during a lawsuit. It ensures that the insured party does not suffer significant financial losses.

Upon buying professional indemnity insurance for Chartered Accountants, a firm gets protection against claims made by a third party during the insurance policy tenure, usually 12 months. The claims may, of course, arise as a result of negligence, malpractice, and other errors, made by the insured while offering professional advice or service to the claimant.

Professional indemnity insurance for Chartered Accountants in India indemnifies any professional liabilities of the insured but only for claims made during the policy tenure. So, if the client makes any claims before the activation period of the insurance policy, the insurer will not cover the losses incurred.

A firm can opt for professional indemnity insurance for Chartered Accountants with a retroactive clause to prevent such an occurrence.

Some of these exceptions are:

  • Libel and slander

  • Criminal and malicious acts

  • Deliberate non-compliance to company policies

  • Infringement of copyright or patent

  • Floating Policy

  • Death arising out of faulty professional services or advice

To Conclude

Despite a chartered accountant’s most sincere and diligent efforts, errors may occur, resulting in financial loss for the client. In such cases, professional indemnity insurance for Chartered Accountants offers a safety net for the insured to fall into and avoid suffering tremendous financial losses.

Firms need to get professional indemnity insurance for Chartered Accountants to protect the business and the employees against third-party claims and allegations.

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

Help us know you better!

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). (Professional Indemnity - Chartered Accountants, 4024 , IRDAN115CP0024V01201920)