Liability Risk on the Rise
Time for CPAs to check their malpractice coverage
While CPAs may view themselves as innocent victims in a malpractice lawsuit, juries do not. They typically side with plaintiffs in suits brought against accountants.
And being a defendant is never a pleasant experience, where your money and reputation are at stake.
Moreover, CPA liability has risen dramatically, according to Bill Thompson, president of CPA Mutual Insurance Co. of America RRG. His advice? “First and foremost, if you don’t already have coverage, buy it! With today’s ever-changing Tax Code and penalties for failure to report certain items, liability has expanded quite a bit over the past several years.”
“Second, if you don’t already have cyber-coverage, buy it! And make sure it not only covers the basics like client notification and credit monitoring,” he said. “You also need coverage for the post-breach forensics, cyber-extortion and terrorism, multimedia liability, and [Payment Card Industry Data Security Standard] assessment coverage. Also make sure your limits are adequate.”
(Click here to see our annual Malpractice Liability Insurance Buyers Guide.)
“When looking for a program to be a good match, it is important to look for a partner that is staying current with the changes and complexities that are being faced by today’s CPA,” said Suzanne Holl, senior vice president of loss prevention services at Camico. “We’re seeing accounting firms of all sizes evolving to meet changes in the complexity of the regulatory environment and the standards being promulgated. The key for us is to help our accountants with the practice management side of how they go about communicating, educating and documenting issues with their clients. We believe that good client service equals good risk management. Good client service goes back to being competent to render the services, and also to being sensitive to communicate, educate and document with their clients.”
“You have to look for continuity and experience in the insurance program you work with,” said Rickard Jorgensen, president and chief underwriter for Jorgensen & Co. “Having an insurer with substantial resources is key.” Read more on Accounting Today.