This is not a rare scenario. If an accountant gets sued, attorney fees and expenses could cost over $100,000 just to get a frivolous lawsuit dismissed. These costs come out of the accountant’s own pockets without professional liability insurance.
Do You Actually Need Professional Liability Insurance for Accountants?
USA: Is It Required?
In the US, professional liability insurance for accountants is not federally mandated. However:
- Many state CPA boards encourage or expect it
- Most corporate clients require proof of E&O coverage before signing contracts
- Without it, you are personally liable for every professional error
UK: Is It Required?
In the UK, it is effectively mandatory for regulated accountants. While professional indemnity insurance is not legally required for all businesses, it is mandatory for certain industry bodies. Solicitors, accountants, and financial advisors need this insurance to protect against claims of negligence or malpractice.