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Everything You Need to Know About Accountant Insurance in Canada

Are you an accountant or bookkeeper in Canada? Do you offer accounting advice or services for a fee? Then acquiring a customized, comprehensive accountant insurance policy package is essential to ensuring your business thrives for years to come. Luckily, our top-notch team can help you access the country’s leading brokers and agents.

In the following sections, you’ll discover more about accountant insurance in Canada and how we can help you acquire the coverage your firm needs.

 

Business Insurance for Accountants in Canada

You work hard to help your clients define, rectify, and limit their financial risks. But no matter how tirelessly you strive for perfection, mistakes are bound to happen.

Regardless of your accounting firm’s size, carrying insurance (especially professional liability insurance) is vital for success. In fact, Chartered Professional Accountants of Canada requires all registered accountants offering public services to take out PLI coverage.

At LiabilityCover, we uncomplicate the insurance process so you can get back to doing what you do best.

 

What Is Accountant Insurance Coverage?

Accountant insurance is a comprehensive protection package that covers the specific risks involved with providing accounting services. Coverage tends to extend to malpractice, negligence, and errors.

The bundle is designed for those whose duties include:

  • Auditing and reviewing engagements
  • Computing, filing, and planning tax
  • Financial planning and consulting

Our experienced team will ensure you access the insurance you need from Canada’s leading licensed brokers or agents.

 

Real-World Accountant Insurance Claims Examples

The real-world insurance claims examples below help to illustrate just how helpful a comprehensive accountant insurance package can be in difficult circumstances:

 

Example One: Data Breach Claim

A hacker steals your clients’ data from your computer system. As a result, their personal and financial information is compromised.

While it’s a catastrophic event, your cyber liability insurance policy saves the day by covering data retrieval, notification, credit monitoring, and incident response costs.

 

Example Two: Negligence Claim

You are filing tax returns for your client. Unfortunately, you made an error that triggered an audit by the Canada Revenue Agency.

Your client successfully sues you for negligence. But your professional liability insurance kicks in to pay for the legal defence and other costs associated with the case.

 

Example Three: Error Claim

You forget to file a required form for your client. The mistake is uncovered, and you are liable for the error.

Your client sues you, demanding you pay for the interest and penalties. Thankfully, your errors and omissions insurance policy covers all the related costs, preventing you from clearing out your bank account and shutting your firm’s doors for good.

 

What Does Accountant Insurance Cover?

People providing accounting services to the public must carry professional liability insurance, as per the regulations defined by the Chartered Professional Accountants of Canada (CPA Canada).

However, other policies are needed to ensure the complete protection of your business. Therefore, a typical comprehensive accountant insurance package tends to include the following policies:

 

Professional Liability Insurance (PLI) Coverage

Sometimes called errors and omissions (E&O) insurance, professional liability insurance protects you against lawsuits alleging financial loss due to your service, professional negligence, failure to deliver your service as promised, or misconduct. It includes claims such as:

  • Breach of professional duties
  • Misleading financial statements
  • Misinterpreted financial statements
  • Alleged errors
  • Actual errors

Most policies cover the case’s settlement fees, legal defence costs, and monetary judgements. However, it won’t cover criminal acts or deliberate misrepresentation.

 

Commercial General Liability (CGL) Insurance Coverage

Commercial general liability insurance protects against the day-to-day operational risks of running a business. Also known as slip-and-fall insurance, it covers third-party claims of property damage and bodily injury.

The policy is recommended for any individual or business that deals with third parties, including clients, vendors, other companies, suppliers, and members of the public.

A basic CGL policy for Canadian businesses tends to start around $450 for a $2 million coverage limit. But our advisors can help you determine your firms’ optimum level of coverage.

 

Cyber Liability Insurance Coverage

Today’s world is highly digital. Therefore, we’re probably safe in assuming that you store your clients’ confidential and personal information on a virtual storage system. If so, cyber liability insurance coverage is a vital resource for long-term survival.

The policy covers the costs associated with cyber events involving your clients’ data and technology systems, including:

  • Notification fees
  • Legal, forensic, and breach management costs
  • Incident response expenses (including the cost of retaining a dedicated response coordination team and a 24/7 hotline)
  • System business interruption
  • System damage and restoration fees

You can purchase a social engineering policy endorsement if required. It financially covers you if an employee is manipulated into providing system access or transferring funds to a scammer’s bank account.

On top of cyber liability insurance, cybercrime insurance may be helpful. It reimburses any loss of funds suffered from cybercrime like phishing or hacking. The coverage extends to legal, notification, and data restoration expenses.

 

Commercial Property Insurance Coverage

Commercial property insurance coverage is often forgotten about when considering accountant insurance. However, it’s essential since it offers financial coverage from the physical loss or damage of your firm’s premises and contents.

The specific coverage areas are as follows:

  • The building itself
  • Any improvements you’ve made as a tenant
  • Your inventory
  • Your equipment, furnishings, and fixtures
  • Your electronics

While the protection is rather far-reaching, the policy won’t cover the following:

  • Wear and tear of your equipment due to standard use
  • The mysterious disappearance of an item where the loss cannot be logically explained
  • Precious metals, securities, and cash
  • Properties left unoccupied or vacant for at least 30 days

If you are seeking protection for the theft or mishandling of precious metals, cash, or securities, you need a crime insurance policy.

 

Who Needs Accountant Insurance Coverage?

CPA Canada states that any firm or independent person providing accounting services must protect their clients and business with adequate professional liability insurance.

You can be held liable for services and advice that cause damage or don’t yield the results promised. Your practice will suffer horrendously during expensive lawsuits from devastated customers without proper coverage.

Here at LiabilityCover, we’ve helped hundreds of accountants and similar professionals find the comprehensive insurance coverage they need, including:

  • Certified General Accountants
  • Government financial managers
  • Financial planners
  • Financial and general accountants
  • Management accountants
  • Tax preparers
  • Bookkeepers
  • Fraud examiners
  • Internal auditors
  • Small and medium-sized accounting firms
  • Enrolled agents
  • Chartered Accountants
  • Chartered Professional Accountants

 

How Much Does Accountant Insurance Coverage Cost?

Typically, you should expect to pay at least $700 yearly for an accountant’s professional liability insurance policy with a $1 million limit. But if you only offer bookkeeping services, you can expect the starting price to be much cheaper (typically around $300 per year).

Alongside that, several other factors affect your premium price, including the following:

  • Your experience — Are you an experienced accountant? If so, you can benefit from lower insurance premiums. Providers believe you’re less likely to make mistakes as you gain experience. When starting your accounting journey, you’ll receive higher rates.
  • Your training — Similar to experience, your level of qualification and certification can influence insurance costs. As an accountant with basic training, you will likely pay higher premiums than those with advanced certifications.
  • Your accounting firm’s location — Some areas of Canada are more dangerous than others. Whether your location suffers from a high crime rate or severe weather conditions, both factors can raise your insurance price. You can find a few of the more expensive (insurance-wise) areas of the country below:
    • Sudbury, Ontario
    • Barrie, Ontario
    • Montréal, Quebec
    • Hamilton, Ontario
    • North Bay, Ontario
    • Winnipeg, Manitoba
    • Lethbridge, Alberta
    • Saint John, New Brunswick
    • Brampton, Ontario
    • Moncton, New Brunswick
    • Windsor, Ontario
    • Surrey, British Columbia
    • Sault St. Marie, Ontario
    • St. John’s, Newfoundland and Labrador
    • Trois-Rivières, Quebec
    • Québec City, Quebec
    • Red Deer, Alberta
    • Regina, Saskatchewan
  • Your annual and projected revenue — While turning over a lot of money is a great indicator of success, it means there’s more at stake if your client pursues legal action. They will likely request more in damages if they know your revenue can withstand the amount. So, insurance providers must charge more to account for the extra risk.

 

Why Choose LiabilityCover?

We specialize in connecting accountants like you with a licensed broker or agent with years of experience covering your industry.

Our process is straightforward, affording you the knowledge and time you need to make effective insurance decisions. We understand that choosing coverage can be tricky, so we aim to uncomplicate the ordeal.

With LiabilityCover, you can let us do all the hard work for you. If you’re ready to find a tailored business insurance plan, you’ve come to the right place.

 

Frequently Asked Questions

 

How Can You Get Accountant Insurance in Canada?

Acquiring the insurance you need is simple with LiabilityCover. We’ve streamlined our process over the years to make it as straightforward as possible. Just follow these four steps:

  1. Complete our short inquiry form.
  2. We establish your insurance requirements based on the answers you provided on the form.
  3. Our team connects you to one of the country’s leading insurers with years of experience covering accountants in your area.
  4. Your assigned insurance broker or agent contacts you to walk you through the process.

 

Why Is Professional Liability Insurance Important for Accountants in Canada?

As a chartered accountant, you must be able to supply proof of insurance on all regulated and public accounting services you offer. It protects both you and your clients and fulfills one of the regulations required by the Chartered Professional Accountants of Canada.

 

How Do Professional Liability Insurance Claims Work?

If your client sues you for failure to provide your accounting services as promised, negligence, or misconduct, you claim with your insurer who covers the compensatory and legal costs.

But there are a few things to remember when claiming on your professional liability insurance. These caveats are as follows:

  • Deductibles — Every claim you make requires a deductible (i.e., the amount you agreed to pay per claim before your policy triggers). Your deductible price is pre-agreed and differs depending on your revenue.
  • Immediate reporting — You must ensure you report any situation that could cause legal action as soon as possible. If you don’t report the incident in time, your insurer can decide not to cover the claim.
  • Whole term limits — The policy limit you choose applies to the whole term and not each claim. For instance, if your coverage limit is $1 million, and your first claim uses $600,000, your limit is only $400,000 for the next claim you make during the same term.

 

What Are the Minimum Coverage Limits Accountants Need in Their Professional Liability Policies?

The Chartered Professional Accountants (CPA) of Canada dictates that the minimum coverage amount per claim depends on how many accountants are employed in your firm. Look at the list below to figure out your required limit:

  • One-member firms — You need at least $1 million.
  • Firms with two or three members — You need at least $1.5 million.
  • Firms with four or more members — You need at least $2 million.

 

Is Professional Liability a Legal Requirement for Accountants?

As per the Chartered Professional Accountants (CPA) of Canada’s guidelines, all accounting firms, regardless of size, need to insure their business with a professional liability insurance policy.

With that said, accountants in Canada are regulated at a provincial level. Therefore, insurance requirements differ slightly depending on where you operate.

Take a look at the list below displaying some differences between various provinces and their PLI regulations:

  • CPA Alberta — The minimum limits are the same as stated in the section above except for limited liability partnerships. In such instances, the PLI requirements are as follows:
    • Partnerships with fewer than four accountants — $2 million per incident
    • Partnerships with more than four accountants — $2.5 million per incident
  • CPA Ontario — You must provide proof of professional liability insurance to CPA Ontario in these circumstances:
    • When you register a firm
    • On your policy’s anniversary date
    • When you’re no longer engaging in the practice of public accounting
    • Within five working days of your policy’s expiration date
  • CPA British Columbia — Standard minimum limits apply. You must notify the Chartered Professional Accountants British Columbia of any non-renewals, cancellations, and policies under the required limit. Plus, you must ensure any prior omissions and acts are covered under the policy.
  • CPA Nova Scotia — Standard minimum limits apply. Your policy must cover claims and defence costs. You need discovery period insurance which ensures coverage for six years after the termination of your practice.
  • CPA Quebec — You must submit a declaration of insurance to the Fonds. You must report any changes in professional situations immediately.

 

Is Cyber Liability Coverage included in an Errors and Omissions Policy?

No, your errors and omissions policy will only cover missed deadlines and mistakes arising from negligence in your services that cause financial loss for your clients. If your computer network is hacked, the coverage won’t protect you against the damages or cover the legal costs.

It’s vital to purchase a cyber liability insurance policy to protect your business from such cyber situations.

 

What Other Insurance Coverage Types Can LiabilityCover Help You Obtain?

  • Directors and officers insurance coverage — If you have a board of directors, you need a directors and officers insurance policy. It covers the costs associated with losses, legal defence, and indemnification against an executive-level member. All types of companies (e.g., non-profit, for-profit, public, and private) should consider a D;O policy. After all, any director can be personally named in a lawsuit! The specific coverage areas are:
    • Wrongful dismissals
    • Employee discrimination claims
    • Inaccurate or insufficient disclosure
    • Reporting errors
    • Misleading statements
    • Claims made by your firm
    • Competitor’s claims
    • Divestitures
    • Corporate manslaughter
    • Decisions that caused harmful financial results for the company’s shareholders
    • Acquisitions and mergers
    • Negligence
    • Misrepresentation
    • Breach of legal or fiduciary duties
    • Failure to adhere to federal and provincial laws
  • Commercial auto insurance coverage — Sometimes called commercial vehicle insurance, it covers all vehicles used for work purposes, including trailers, vans, cars, and trucks. Any vehicle used for transporting tools, people, goods, equipment, or materials should be covered by a policy. Many people believe their personal car insurance can cover their work vehicles, but that is a misconception. Commercial auto coverage exists because personal policies exclude all business-related driving. Plus, they’re easier to customize for a variety of employees and company types. We suggest this insurance if:
    • Your employees use a vehicle for work.
    • You use a car for work reasons only.
    • You deliver materials, people, clients, or products via an automobile.
    • Your vehicle has work equipment attached (like tool racks).
  • Business interruption insurance coverage — Usually included in your commercial property insurance, it covers your net income lost during a covered property loss (like fires). However, it won’t cover lost income from floods, earthquakes, pandemics, communicable diseases, viruses, undocumented income, acts of terrorism, or broken items. The policy tends to pay for the following expenses alongside reimbursing your lost income:
    • Overhead costs like lease or mortgage payments, electricity, and water
    • Employees’ wages and payroll
    • Transferring to a temporary business location when your typical premises are damaged
    • Internet connections
    • Telephone connections
    • Loan repayments if they’re due throughout the covered period
    • Tax payments if they’re due throughout the covered period
  • Builders risk insurance coverage — Otherwise known as course of construction insurance (COC), it protects your building and liability throughout a construction job. Interestingly, it’s normally the project’s owner who purchases the policy. However, it’s important to establish this when you draw up the contract. There are two types of builder’s risk insurance:
    • Homeowners’ coverage — It keeps your building safe while under construction (i.e., when a standard home insurance policy won’t cover the structure).
    • Workers’ coverage — Damage to structures, interruptions, and delays threaten the completion and success of your project. It covers the costs associated with materials, delays, equipment, and labour.
  • Legal expense insurance coverage — LEI coverage is designed to cover legal costs in common business disputes. It ensures you are legally represented when needed, can pay the legal fees, and get legal advice. Usually, the policy covers pleadings, pre-trial mediation, investigations, discovery, appeals, and settlements. There are two types of legal expense insurance you can get:
    • Before the event insurance — It covers unexpected legal events (i.e., you buy it in case something happens). Regardless of whether you pursue or defend the legal action, the costs are covered.
    • After the event insurance — It protects you when a claim has already happened (i.e., you’ve already lost a case). You’re covered for adverse costs and disbursements.
  • Malpractice insurance coverage — Malpractice insurance is made for those in the healthcare industry. The policy offers financial protection during job-related claims or lawsuits. The coverage areas are as follows:
    • Misdiagnosis
    • Failure to diagnose
    • Incorrect dosage or prescription
    • Errors and omissions while on duty
    • Performing unnecessary surgery
    • Bedsores and pressure ulcers
    • Mental suffering of a patient caused by consultation or a procedure
    • Lack of informed consent
    • Failure to monitor, inform or communicate
    • Referral delay
    • Providing subpar treatment
    • Operating on the wrong body part
    • Physical harm to a patient
    • Treatment-related injuries
  • Product liability insurance coverage — Product liability insurance, sometimes called product risk insurance, covers lawsuits arising from products you sell, distribute or manufacture. Compensation and legal fees for bodily injury or property damage caused by your product are covered.

 

What Other Professions Can LiabilityCover Help Acquire Insurance Policies?

We help a wide variety of businesses and professionals find the insurance they need, including but not limited to: