Accusations of professional negligence, dishonesty, and such can arise against chartered accountants, which, apart from being a blot on their reputation, can bear a significant financial risk as well. Luckily, some provisions safeguard the interests of Chartered Accountants against such lawsuits under professional indemnity insurance policies.
In India, professional indemnity insurance protects firms and individuals who generally offer consultancy services to their clients. Chartered Accountancy firms come under this category.
It becomes essential for such businesses to have professional indemnity insurance in India as they regularly handle confidential data for their clients. There could be an accidental breach of this confidentiality, and financial loss, resulting in a damage claim from the client for a considerable sum of money.
The professional indemnity insurance coverage provides full compensation to clients who have incurred losses due to alleged failure of service, negligence, or omissions on the part of the insured Chartered Accountancy firm or individual.
Professional indemnity insurance for Chartered Accountants in India also covers the sum of all expenses incurred by the insured Chartered Accountancy firm during a lawsuit. So, the insurance company compensates for all the charges incurred during the defense, up to the total sum insured. Professional indemnity insurance saves the firm or individual from substantial financial loss. Thus, both parties, the claimant and the defendant, are adequately indemnified.
The cost of professional indemnity insurance in India varies from profession to profession and from insurance company to insurance company. The risks involved in every domain are different, so it isn’t easy to fix a standard insurance rate for all professions. For example, the risks involved with a medical surgeon’s work are not the same as that of a Chartered Accountant.
It is essential for every firm providing consultancy services to have professional indemnity insurance to protect its employees against third-party lawsuits.
Despite a Chartered Accountant’s best efforts, errors are bound to happen, resulting in losses for the client. The client can instigate judicial proceedings against the Chartered Accountancy firm or the Accountant to recoup the losses.
So, it is prudent for professionals and firms to get professional indemnity insurance policy to handle claims arising from unsatisfied clients.
- Professional Indemnity - Chartered Accountants
- Product Code: 4024
- Product UIN: IRDAN115CP0024V01201920