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Does an Accountant Need Insurance?

ICAS also wants your policy to be with an insurer from its approved list – although rest assured that the insurers we use are on there, guaranteeing you the cover you need.

14. The R&D tax advice claim wave

There are further minimum ICAEW insurance cover requirements for licensed firms, those authorised by the FCA to conduct insurance distribution activities, and accredited probate firms. You can find them here (under regulations 3.4-3.5). Your PI must include at least six years’ retroactive cover to cover your past work. This is usually free to add to your policy. If you’ve been trading for less than six years, backdate cover to the date you started your business.

3.4 Continuing obligations

The final requirement of ICAEW insurance is two years’ run-off cover if your business closes its doors. This ensures you’re covered if you face a claim for work you did before you ceased trading. ICAS says its practising certificate holders must have professional indemnity (PI) insurance, and it also specifies how much. The required minimum bet bookmakers online offers levels of PI cover are for ‘any one claim’ and are based on your business’s total yearly income: Annual income over £800,000: £2 million. There are further minimum ICAS insurance cover stipulations for licensed firms and those authorised by the FCA to conduct insurance distribution activities. The final requirement for ICAS insurance is for at least two years’ worth of run-off cover if your company stops trading.

What happens to PI on practice merger or sale?

Anyone with a gross fee income over £400,000: £1 million worth of cover. The other proviso is that your AAT insurance must be ‘retroactive’, to cover work you did in the past. That’s because PI works on a ‘claims made’ basis. It means for a claim to be valid, your policy needs to be up and running both when the work was done and when a claim is made. If you’re a member of the ICAEW with a practising certificate and engage in public practice, professional indemnity (PI) insurance is essential.

So, where to start?

If you’re unsure if your business activities are considered public practice, read the ICAEW’s definition of public practice. The ICAEW says your PI policy must be with an insurer from its approved list – although rest assured that the insurers we use are on there, guaranteeing you the cover you need. It also sets minimum levels of PI cover, which are for ‘any one claim’, based on your business’s total yearly income: Annual income over £800,000: £2 million. Annual income less than £800,000: 2.5 times your gross fee income and not less than £250,000. However, the ICAEW warns members to think carefully about opting for less than £2 million worth of cover and potentially leaving themselves exposed. This takes care of claims relating to work you did before your business closed its doors.

The regulatory backdrop — what ICAEW, ACCA and AAT require

Scroll down to find out exactly what you need. If you’re not chartered, you don’t strictly need accountants’ insurance. If you’re licensed to practise accountancy by ACCA, AAT, ICAEW, ICAS or CIMA, then you do. But as ever, there’s a big difference between what’s needed and what’s best for your business. Everyone’s capable of making an error, so it makes good sense to have professional indemnity insurance for accountants.

Who does professional indemnity insurance cover?

It protects you if a client claims your work doesn’t add up and pays your legal expenses as well as any damages. Oh, and if you have employees, you’ll need employer’s liability insurance too. Professional indemnity (PI) insurance is mandatory for all ACCA accountants with a certificate to practise. Your ACCA insurance must also provide a minimum level of cover, which is proportional to your income and works out like this: Annual income less than £600,000: whichever is greater – 2.5 times your total income or £100,000. Annual income over £600,000: £1.5 million. Here’s what CIMA has to say about professional indemnity (PI) insurance: ‘As a CIMA Member in Practice (MiP) you must have professional indemnity insurance.

9. IFA Practising Certificate PI requirements

Use these figures as a rough-and-ready guide to give you an indication of what is basically required; calculating the amount of insurance an accountant needs can certainly be a complicated answer. A professional insurance specialist can help also you figure it out if you still have questions. Rated 4.8 out of 5 stars on Reviews.co.uk Protect your work, your reputation and your bank balance with professional insurance for professional people. Quote online in less than 2 minutes from £15.46 a month for £250,000 cover Professional indemnity insurance defends you against claims of negligence, breach of confidentiality, dishonesty, libel and slander. £1,000,000 for physical damage and injuries caused by your business £10,000,000 legally required cover for employers Based on an annual income of up to £40,000.

14.1 The policy backdrop

Quote online for turnovers up to £500,000, or call and talk to an expert. When the numbers don’t add up Your clients expect the utmost care and attention. That’s perfectly understandable when it’s their money in your hands. But what happens if you make a mistake? The kind that can cost you time, money and your reputation? Not only is it a mandatory requirement, it is also in your interests and that of your business to have appropriate levels of

• Minimum cover for Public Liability in many service contracts often starts at £1 million.
• Professional Indemnity minimums for accountants and auditors are often set by their professional institutes.
• Cyber insurance minimums in IT contracts are becoming standardized, often requiring £1-5 million cover.
• Product Liability cover of £2-5 million is a common minimum for manufacturers supplying large retailers.

professional indemnity insurance.’ It doesn’t specify how much PI cover you should get, but it does suggest speaking to a broker for advice.

Meet our experts

As of 2026, the ACCA has simplified its requirements into two primary income bands, having increased the absolute minimum limit from £50,000 to £100,000. For firms with a total income below £600,000, the required PII limit is the greater of two and a half times the firm's total income or £100,000. For firms with a total income of £600,000 or more, the minimum limit of indemnity is now fixed at £1.5 million. Note that the old '25 times the largest fee' multiplier has been removed from the standard calculation to simplify compliance. Accountants who are not chartered technically don't have any obligation to buy PII.

12.5 Audit committee scrutiny

That said, it is widely recommended for all accountants to have professional indemnity insurance. To figure out how much you need, you can still follow the guidance issued by the ICAEW and ACCA or speak with a specialist broker or agent regarding limits of insurance. We've calculated the minimum PII limits for accountants of various sizes according to ACCA and the proposed new ICAEW requirements in the table below. As you can see, we varied both the total annual fees and the largest fees earned from one client in the past year (which factor into the ACCA calculations). While these figures show a range of accountancy business sizes, if your business size is not displayed here then you can use the formulas bet free bet no deposit slot uk shown in the previous section to calculate what you would need. In our experience, that’s a very good idea.

We usually recommend buying as much PI cover as you can afford, but at least 2.5 times your annual fee income.

• When hiring subcontractors, ensure they hold their own EL insurance to avoid liability transferring to you.
• For joint ventures, a project-specific insurance package meeting all parties' minimums is often required.
• When working overseas, local statutory insurance minimums must be met, which can differ significantly.
• For mergers and acquisitions, due diligence must verify all target company insurance meets legal minimums.
• Temporary event insurance must meet local authority requirements for public safety and liability.

There’s more about pinpointing the best level of CIMA insurance for your business here.

• Check if your business needs Professional Indemnity insurance as mandated by your professional body.
• Review client contracts, as they often specify minimum insurance levels for Public Liability.
• Assess the value of assets and potential business interruption to determine adequate property insurance.
• Consider Cyber Liability insurance, increasingly required in contracts for handling client data.

CIMA also advises members to consider run-off cover.

• Fines for non-compliance with Employers' Liability insurance are enforced by the Health and Safety Executive (HSE).
• Operating without required motor insurance can lead to vehicle seizure, fines, and penalty points.
• Breaching contractually agreed insurance levels can lead to contract termination and legal claims.
• Operating without mandated Professional Indemnity can result in disciplinary action from your regulatory body.
• Inadequate insurance can lead to personal liability for directors if the company cannot cover claims.

If you close your business, it covers claims concerning work you did before you stopped trading.

Accountants Guide to Professional Indemnity Insurance

If you’re in partnership, have fellow directors, or employ full-time or part-time staff, ACCA wants you to have Fidelity Guarantee Insurance (FGI) - with £100,000 as the minimum level of cover. FGI covers you for theft by your employees and should include your sub-contractors too. If you cease trading, ACCA says you need at least six years’ worth of run-off cover. It takes care of any claims that could arise from work you did before you closed your business. It’s a good thing, considering problems bet best betting sites free spins no deposit can take months or even years to emerge.

12.4 The audit-claim hot spots

If you practise accountancy or bookkeeping under an AAT licence, you need professional (PI) indemnity insurance. Your AAT insurance must work on an ‘any one claim’ basis, which means each claim is treated separately. So, if your level of cover is £100,000, your insurer will pay compensation up to that amount for each claim, as well as up to £100,000 in legal costs. You also need a minimum level of cover according to your type of business and income, which the AAT specifies like this: Sole traders: whichever is greater – £50,000 or 2.5 times the firm’s gross fee income. Partnerships and limited companies: whichever is greater – £100,000 or 2.5 times the firm’s gross fee income. It provides an essential security blanket since problems and claims can take many months or even years to emerge.

Membership Conditions and Additional Premiums

For starters, PII for a chartered (or chartered certified) accountant must be considered 'qualifying insurance'. Underwriters issuing qualifying insurance agree to abide by certain minimum terms on accountant PII, to make sure all chartered accounts maintain a certain standard of protection. Next, chartered accountants have to abide by certain minimum limits of insurance as stipulated by their accountancy body membership (e.g., ICAEW, ACCA). The required amount of professional indemnity dictated by these bodies is linked to fee income (both annual fee income and largest client fee income). BUT many accountancy businesses need to hold more depending on their fees and the work they do.

The benefits of joining ICPA are clear. On average, members save thousands a year with the ICPA, as well as benefiting from unrivalled support and resources.

Let's have a look at the minimum PII requirements as stipulated by the Institute of Chartered Accountants in England and Wales (ICAEW) and the Association of Chartered Certified Accountants (ACCA), since these are the two largest accountancy bodies in the UK. Under the ICAEW Professional Indemnity Insurance Regulations (effective September 2024), the previous £100,000 minimum has been abolished. For 2026, most chartered accountancy firms are now required to maintain a minimum limit of indemnity of £2 million for any one claim and in the aggregate. However, for smaller practices with a gross fee income of less than £800,000, the minimum limit is calculated as two and a half times the firm's gross fee income, subject to a absolute minimum of £250,000. Additionally, firms must ensure their policy excess does not exceed the higher of £3,000 or 3% of their gross fee income. Accountants’ public liability (PL) insurance covers physical damage rather than financial losses.