As an accountant, your client’s finances are in your hands. This is a big responsibility and if you make mistakes, you could be liable for the outcome. Therefore, it is so crucial to have liability protection for accountants. Here are two reasons why you should not forget the coverage.
Third-Parties Want Compensation
Unfortunately, it is not rare for an accountant to face a lawsuit by a third-party. This maybe your client’s business partner, his or her mortgage company, or shareholder that files the lawsuit. For instance, if you give your client advice and he or she winds up filing for bankruptcy, those affected by the bankruptcy may file a lawsuit.
Misunderstandings and Deteriorated Relationships
You may have thought that you and your client were on the best terms. However, misunderstandings and loss can quickly change a relationship. Perhaps you miscommunicated when trying to explain a situation and your client blames you for the monetary loss. Suddenly, you are no longer on good terms and he or she may be likely to file a lawsuit against you. Simple mistakes can lead to these kinds of situations.
Without coverage, you could have to pay out of pocket for lawsuit costs. Accountants face lawsuits regularly and this is why liability protection for accountants is so important.