Errors and Omission Insurance

[equinecpa]

I was wondering what you all do with regards to Errors and Omission insurance? Do you consider it a must have, something you can do without or otherwise? Have any of you had claims on it?

I haven't carried it but often feel I should. On the other hand I'm not so sure "self insuring" ie setting aside the equivalent to annual premiums isn't a bad idea.

I know I"m human. I know I make mistakes. I have made it an unwritten policy to compensate my clients for any errors I have made by paying their penalties and sometimes interest. To date I haven't had any issues arise.

If you do carry the insurance can you recommend any providers?

Thanks

Carolyn

[DTS]

E&O insurance

Carolyn,

Take a look at this thread from awhile back. Some interesting comments and a few links for you to chose from.

http://www.thetaxbook.com/forums/showthread.php?t=4165&highlight=insurance

I do not carry it, I feel I should carry it, probably will carry a small policy this coming year. I think the more exposure you and I would have would dictate whether or not we should have it. At least, that's the way I look at it and I may be way off base in that thinking!

Dennis

[Black Bart]

Malpractice Insurance

...Errors and Omission insurance? Do you consider it a must have...had claims...?

Like you and Dennis, I once had none but felt I should have. Then, years ago, a deadbeat turned me in to the state accountancy board for an error (I think he might have sued if his account -- never paid -- wasn't always over a year old). Shortly after that I bought $10,000 E&O from a local firm for $180 annually.

...can you recommend any providers?

I carried that for years, but posters here said $10K was a piddlin' amount nowadays and might just pay the lawyer's fee. One of them recommended the outfit below so this year I bought a $100K policy with them:

Philadephia Insurance Companies
Marsh Affinity Group Services-Accountants
Att'n: Linda Ruschill, Agent
1776 West Lakes Parkway
West Des Moines, IA 50306
1-800-337-2621

Cost-$305 per year, $1,000 deductible, furnishes a lawyer. Is this policy/company any good? I don't know; never had a claim. But this is "pore folks" territory and there's no way I could screw up bad enough to cost anybody around here $100K (hmm, I might oughta say "knock on wood" at this point 'cause ever' time I say "No way," somethin' comes along and bats me right between the eyes with a "Way!")

But anyway, the upside is that now I don't worry about it so much.

[RJM]

Good idea to insure

I think it is a good idea to get prof liability coverage. One of the best reasons is the availability of expert help whenever you may have a question or concern about a past error or a complaining client, or how to fire a client. Since the insurer and the insured both do not want any claims, the insurer will normally give the insured lots of free advice whenever a potential problem exists.

You also can get timely literature and e-articles which alert you to new concerns about how to run a tax/accounting practice, based on new case law. My coverage is a bit more expensive, $440 for $100/$250 coverage, but is very broad coverage.

[equinecpa]

Thanks for the very insightful replies.

I think it is a good idea to get prof liability coverage. One of the best reasons is the availability of expert help whenever you may have a question or concern about a past error or a complaining client, or how to fire a client. Since the insurer and the insured both do not want any claims, the insurer will normally give the insured lots of free advice whenever a potential problem exists.

You also can get timely literature and e-articles which alert you to new concerns about how to run a tax/accounting practice, based on new case law. My coverage is a bit more expensive, $440 for $100/$250 coverage, but is very broad coverage.

This is a very interesting statement. I currently have a client who I'd like to turn into small claims but haven't as I wonder about reciprocal outfall. A very good point indeed - I'd love to get professional advice on handling this situation.

I will investigate the companies mentioned.