Almost all accountants need Errors and Omissions liability insurance to protect their bottom lines against lawsuits. Even the most careful accountants can make small mistakes that result in expensive suits and settlements. Accountants E&O coverage can cover these costs, but many companies believe this coverage is too expensive.
If you’re worried about the monthly or annual premiums for your accountants E&O policy, there are a few things you can do to mitigate that cost. First, you can choose a plan with a higher deductible. This option may lower your annual cost to have the plan. However, you can owe more when the time comes to make a claim. If you choose this option, make sure to have enough savings to cover your deductible.
Bigger firms pay higher premiums than independent accountants. If you’re thinking about expanding, be sure to consider the potential increase in your liability insurance costs. Stay small if the rise in costs is more than the potential increase in revenue.
Sending regular engagement letters to your client is not only good for your customer relations, but it can also reduce your insurance costs. Accounting firms that include these letters in their regular practice tend to have lower rates. It’s a win-win.
Don’t settle for lesser coverage to save a few dollars on your insurance premium. Try these tips instead.