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Cyber Liability Exposures Are Significant

of small businesses do not have a formal plan for addressing a cyber attack.

According to the 2012 NCSA/Symantec Small Business Study, most businesses are unprepared for handling data breaches, which puts accountants at a considerable disadvantage. CPAs work with the personal and financial information that cyber criminals want. And theft of sensitive data isn’t the only crime an accountant needs to worry about. A data breach in an accountant’s office can result in identify theft, corporate account takeovers, and tax-refund fraud. As the risk of data breach grows, so does the risk of finger-pointing and business-demolishing lawsuits, which makes Cyber Liability Insurance an essential coverage for bookkeepers and CPAs.

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Recommended Insurance Policies for Accountants & Financial Service Professionals

Independent accountants, tax preparers, and bookkeepers handle their clients' important and sensitive information. Their access to financial data exposes them to all kinds of risks, from allegations of negligence to cyber security breaches. Let's review the potential exposures your finance clients may face so you can find adequate coverage for them.

Based on the unique risks accountants and tax preparers may encounter, they should consider carrying the following policies:

General Liability Insurance

General Liability Insurance covers third-party lawsuits brought against your client for premises liability or property damage liability. Say, for example, a tax advisor's client trips over a welcome mat in the office. If the client suffers a bodily injury, they can sue the tax professional simply because the accident happened on their commercial property. When that happens, General Liability covers legal defense fees and settlements or judgments.

Professional Liability Insurance / Errors & Omissions (E&O) Insurance

Even the most meticulous finance professional can be sued for negligence or professional mistakes. Professional Liability Insurance shields your client from the high cost of a lawsuit when a disgruntled customer claims they suffered financial damages because your client provided incomplete or substandard service. Also called Errors and Omissions coverage, this policy covers the litigation costs associated with the claim, including attorney fees, settlements, or judgments.

Cyber Liability Insurance

The information your accounting and financial service clients handle makes them a juicy target for a online hackers. If your client stores sensitive third-party data on their computers, clouds, or networks, they should consider carrying Cyber Liability Insurance. This policy covers the financial fallout associated with a security breach, including the cost of notifying customers that their information was stolen. It can also pay for credit-monitoring services and a public relations campaign to refurbish your client's reputation.

Property Insurance

Your client probably owns or rents office space, furniture, and equipment to keep their business running smoothly. If any of your client's business property is damaged in a fire, storm, or criminal act, Property Insurance can pay to repair or replace their insured assets.

Workers' Compensation Insurance

Even if your client has only one employee, they may be obligated to carry Workers' Compensation Insurance by their state's laws. Workers' Comp covers medical expenses and disability wages when your client's employees suffer occupational injuries. Most policies also include Employer's Liability Insurance, which covers your client's litigation costs if they are sued over the workplace accident.

Tips for Insuring Accountants & Financial Service Professionals

Bookkeepers, CPAs, and financial planners deal with money every day, so they may prioritize finding reliable coverage at an affordable price. Here are two ways you can help your clients save money on their insurance premiums:

See if they qualify for a Business Owner's Policy (BOP)

If your client has a low risk profile, they may be eligible for a Business Owner's Policy. A BOP packages General Liability and Property Insurance together at a reduced annual rate. Plus, you can customize the bundle with endorsements to fit your client's other needs.

Offer the option of Excess Insurance

Excess Insurance comes in two forms, Excess Liability and Umbrella Insurance. Both are cost-effective ways to boost your client's liability coverage. Umbrella Insurance steps in when a claim exceeds the limits of certain underlying policies (such as General Liability or Employer's Liability Insurance). For example, if your client is found liable for $1,500,000 worth of damages, but their General Liability policy only covers $1,000,000, they can make a claim on their Umbrella policy to access the additional funds needed. Excess Liability works the same way but has a single underlying policy. Note: Neither Excess Liability nor Umbrella Insurance can be applied to Professional Liability Insurance.

Financial service professionals know a good deal when they see it. Be sure to compare policies for adequate coverage, affordable premiums, and reasonable deductibles.

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