If you are running a bookkeeping business or are about to start one, then you need to ensure you have adequate cover in the form of public liability bookkeeping insurance against potential mistakes.
Although it not a legal or membership requirement like accountants it's good practice to underwrite against potential mistakes made in your business.
The Types of Bookkeepers Insurance Cover Available
As with all professions, a bookkeeper has direct contact with people and companies even if you are operating alone and don't have any staff to control. As you're offering professional advice, you have a duty of care as to the information provided.
Sometimes that may be incorrect for one reason or another and your client may incur a financial loss and may seek compensation for you. That's where specific insurance policies help mitigate the complete cost of any award made against you by the courts and the legal expenses to cover the costs of any claim.
- Public liability insurance covers you against third-party injury and property damage.
- Professional indemnity insurance mitigates you against advice or work you undertake.
- General office insurance is much like home contents insurance for your office.
- Critical illness cover helps you financially if you're unable to work due to illness or an accident.
- Employers' liability insurance covers you against claims made by your employees and is a UK legal requirement if you have staff.
- Business interruption insurance provides financial assistance and lost revenue if you can't work in your office because of fire, flooding, or other eventualities.
There are two main types of insurance for sole trading bookkeeping businesses which are public liability and professional indemnity insurance to consider.
What is Bookkeepers Professional Indemnity Insurance?
Professional indemnity insurance or PI covers you against professional business mistakes made through professional advice where the third party incurs a financial loss of some nature because they used the advice they paid for which later turned out not to be true or better advice was available.
It depends on the turnover of your business as to the amount of cover you require but usually most businesses have a cover of around £1-£2million annually and this will have a premium of £150-£200 per year.
It covers the cost to settle any claims, the legal charges, and usually includes items such as slander, libel and breach of copyright. This type of insurance is what most professionals have as standard.
What is Bookkeepers Public Liability Insurance?
Public liability insurance (or PL) covers you if you deal face to face with the public and cover your business if it causes injury or death to a member of the public or damage to their property and covers the compensation payments and legal fees associated with any claims.
If you're a bookkeeper that works from home, then it's unlikely you'll need this cover. But, if you visit clients' offices, their place of work or their home business then it's worth thinking about to protect yourself.
It's not a legal requirement but most businesses get cover of £2million as the cost of claims is increasing rapidly.
These days the cost of equipment in your office is very high and sometimes not covered by home contents insurance (as you have to specify whether you are using your home as an office and most people don't tick the right box) so having office insurance could be critical.
Some policies also allow you to insure against loss of earnings due to business interruption such as flooding or storm damage. Additionally, by choosing office insurance some insurers also included public liability and professional indemnity cover as well.
So those are the main bookkeeping insurance products you should consider as life as a bookkeeper. Compare quotes online to get the best deal but check the small print for any exclusions or excesses you may have to pay.