Accounting Firms Insurance in California

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By: Vernon Williams

Owner of The BFIS

888-412-7630

As an accountant, your clients rely on you for your expertise in all things accounting, from generally accepted accounting principles to preparing financial statements and mastering the tax code. You play a crucial role in helping individuals and businesses achieve their financial goals.


The right insurance policy for your accounting firm will protect you and your company from any financial damages if there are ever any lawsuits brought against you. This way, you can remain focused on providing the best possible service to your clients.


Disgruntled clients, fires, leaks, and hackers are all potential threats to your business. While you may not expect them to happen, they could occur at any time. If you're not prepared for them, they could jeopardize all the work you've put in your business.


If any number of these issues occur, they could bring your firm monumental financial losses. If you want to protect your business finances in case of a lawsuit, purchase the right insurance coverage for your accounting firm.


If any of the following apply to you, then you should consider buying insurance for your accounting business:


  • You want to be sure that you and your accounting practice are covered against any potential litigation arising from bad reviews or mistakes in your work.
  • If you store private customer or employee information, like financial documents or tax records.
  • You have employees.
  • Some benefits you offer your employees include health insurance and a 401(k).
  • If you work in an office that you lease or own, and you store valuable equipment or property in that office.


Types of Insurance For Accounting Firms in California



In the state of California, accounting firms are required to carry certain types of insurance coverage. This includes:

Commercial General Liability


If you cause bodily injury to another person or damage someone else's property, commercial general liability insurance will protect your business. This type of insurance is not usually required by law, but it's highly recommended for any business. If you're renting office space, check your lease to see if general liability insurance is already a requirement.


Commercial general liability covers:


  • Property Damage: Covers physical damage to another party's property.
  • Bodily Injury: Covers medical costs if someone is injured while on your premises or using your services.
  • Personal and Advertising Injury: Protects you against libel, slander, copyright infringement and false advertising claims.

Professional Indemnity Insurance


All the work done by your accounting firm should be of the highest quality, but mistakes can still happen. Professional Indemnity Insurance will protect you from claims made against the work you do for clients. This type of insurance covers any losses that are due to negligence, errors or omissions in your professional services. It also covers the cost of defending yourself against such claims.

Workers Compensation Insurance


Every state requires commercial insurance for businesses, so there's not much to consider - your accounting firm needs it. Fortunately, workers' compensation won't be a huge expense for your business since an office is generally a low-risk workplace.


But accidents happen, and if one of your employees is injured at work - no matter where they are or what they're doing for your company - workers' compensation will cover it.


Workers compensation insurance in California covers:


  • Medical bills and lost wages for any injured employees.
  • Legal fees if you're sued by an employee or their family.
  • Funeral expenses in the event of a workplace death.
  • Benefits to cover any permanent disabilities.

Property Insurance


If you own or lease an office, then property insurance is a must. It covers physical loss or damage to your building and contents due to fire, theft or vandalism. It also covers the costs of rebuilding your office in the event of a disaster, such as an earthquake. Property insurance can also cover the physical repairs or replacements of lost equipment, furniture, documents and more.

Cyber Liability Insurance


Cyber liability insurance is becoming increasingly important for businesses as data breaches are on the rise. If your accounting business handles confidential information, like customer or employee data, you need to make sure it's protected.


Cyber liability insurance covers the costs associated with a data breach, like customer notification costs, credit monitoring services and legal fees. It also pays for any fines or penalties if you fail to comply with data protection laws and regulations.

Group Health Insurance


Group health insurance is a great way to attract and retain employees. It can also help you save money on medical costs, as group plans are often cheaper than individual ones. In California, employers are required to provide health insurance coverage for employees who work more than 20 hours a week.


Group health insurance in California covers:


  • Medical bills and hospitalization fees
  • Prescription drugs, vision and dental care
  • Mental health services and substance abuse treatment

Directors and Officers Liability Insurance


Directors and officers liability insurance (D&O) is necessary for any business that has directors, officers or other leaders. It protects the personal assets of these individuals in the event of a legal claim against them related to their professional duties.


D&O insurance in California covers:


  • Legal fees associated with defending claims against directors and officers
  • Damages awarded, if any, to plaintiff(s)
  • Costs associated with an SEC investigation

Employment Practice Liability Insurance


Employment practice liability insurance (EPLI) is an important type of insurance for businesses that have employees. It covers you against claims made by employees for wrongful termination, discrimination, sexual harassment and more.


When you purchase EPLI in California, you're covered for:


  • Employment-related lawsuits filed by current, former or potential employees
  • Investigations or legal proceedings by the EEOC or other state and federal agencies
  • Costs associated with defending against claims
  • Wage and hour disputes
  • Damages awarded, if any, to the plaintiff(s)
  • Settlements and attorney fees.

Conclusion


Any business owner or service provider is inevitable to have some type of monetary loss due to a mistake made during the course of their job. However, for accounting professionals that work with very sensitive and confidential information, one error could result in catastrophic consequences.


If an error is made, Not only could it result in a loss of money for the customer, but also lead to a lawsuit against your business that could put you out of pocket. In addition to this, natural disasters or accidents are very real threats that businesses face on a daily basis.


Taking preventative measures to plan ahead for possible problems could be crucial to the survival of your accounting business. With the right insurance coverage, you can not only protect your business and financial livelihood, but you can also provide safety and security for those under your employ.

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