E & O Insurance

[JON]

Claims made

is what most liability policies are. Which means if you have a policy in 2008 and a claim from a 2005 tax return is made you are covered in 2008. Insurance companies are not getting a break it seems the logical way of doing it. When you come to the end of your practice you have the option to "buy your tail". They give you a quote for a forward rolling liability coverage on your past practice. I think my profession has become so sensitive that I have always had the protection (30 years) and never had a case, but I will still "buy my tail" when retirement comes along.

If the liability seminars are correct in the tax return profession you seldom are liable for taxes charged on a subsequent audit, but may have claims against you for penalties and maybe interest. However, you need to read 2030 and make sure professional standards are not the problem. Advice will always cost you more. Advice should always be in writing. The best example someone calls and says I am selling my home what are the income tax consequences and you give the the correct answer without out written communication, guess who they believed when it went to court. The taxpayer said all he was told is it was taxfree and he did not hear anything about having to live there for any specific amount of time. The court assumes a good professional would not have allowed anything to be left to the interpretation of the taxpayer and guess who wins.

[Henry R]

Burke, and others

Thanks for the info, but this is the third time I have attempted to respond to posts here on this board.

Burke, I have printed off your reply and will look into it. Thanks.

Others, thanks for your input. But no, I am not famous, just trained there and spent my first two years working in their settings. Was nice way to start career.

[Snaggletooth]

October 21 conversation

Discussed this factor today with Marsh. The $300 premium is very common for small volume practitioners and I suspect sure that the cost of issuing the policy is more than the risk. The $300 premium is for the 1st year only, and is low because there will be fewer claims allowed in the first year. Tax returns prepared in prior years are not covered. Next year the premium goes up to $420, and then up again 2 years hence.

Like I said before, they are insulating their risk on both ends - shutting off claims originating from prior work on the front end, and shutting off claims filed on the back end. Insurance is available for claims filed after the nominal coverage ceases, at a cost of 285% of your final year premium. They refer to this as a "tail."

I can postulate fairness with this situation until I'm blue in the face, but I'm not driving the train. I would rather pay more each year, and have a 1:1 mapping of either origin or claims. Marsh was recommended heavily by NATP. Is anyone aware of a better deal?

Thanks to all of you for responding.

[JON]

Terminology???

There are combinations of policies, but the two basic policies are "claims made" and "occurence". In our profession I think "claims made" is about all that is out there. You can get coverage for almost anything if you request it, but it comes at a price.

[MLINDER42]

Better Deal

I have been with EZ Insurance Solutions and it has been 329.00 for the past four years.I found them at the NATP course.They are endorsed by NAEA.