Before you know the significance of indemnity insurance for Chartered Accountants, it is necessary to understand what this insurance implies for the professionals. The following points demonstrate the significance of this insurance.
- This insurance policy is meant for professionals such as Chartered Accountants as well as others such as engineers, doctors, and architects.
- The insurance helps the Chartered Accountants in India to protect themselves from financial losses resulting from claims due to errors that occur unintentionally. It also provides coverage against the omissions the commit while delivering professional service.
- The insurance applies when the loss or the damage is caused to a third-party. It covers physical or bodily damage as well.
- When it comes to claims covered under this insurance policy, only the civil claims are entertained. No claims that arise out of criminal acts or those committed in violation of the ordinance law.
- A Chartered Accountant firm in India can also get coverage under this policy.
1.Level of insurance
Whether you have CPA or CA accreditation, the authorities require you to hold a certain level of insurance. You must investigate and find out what the relevant association requires from your business to ensure that you get adequate coverage. Finding out the requirements of insurance by the Chartered Accountants in Gurgaon will help you to know what you need.
2.Assessing the risks
After finding out what the other association expects from you, a business may face several risks. Even if you require minimum level of insurance, there are a number of risks that your business may face. The coverage amount may differ depending on the requirements, and there are a few things you must consider. You have to take into account the existing area of practice and those you intend to include in the services. Apart from this, you have to consider the experience and the expertise of the firm, composition, and the procedures of internal control. Furthermore, you have to keep in mind the technology to be used, the size of the clients, and the maximum level of exposure. For instance, the Chartered Accountants in Bangalore must asses the risks of their firms before availing the indemnity insurance coverage.
3.Difference of policies
Differences in the indemnity insurance policies are bound to occur. You have to read between the lines, go through the fine print of the policy to know what is to be included or excluded. Make sure you know what you are covered for instead of embracing the policy blindly. The chances are that you may not understand the meaning of the technical terms for which you must to an insurance professional to understand the meaning of those terms. You may get additional coverage for certain policies.
- Documents that are lost
- Cost of public relation
- Statutory liability tat includes coverage for those braches that are unintentional
- Coverage for loss due to the dishonesty of the employees
- Cost for attending the court and the official investigation
In addition to this, some of the policies may also contain those extensions that are optional and you may easily add them to the policy. Apart from this, the policy may not cover the former joint ventures or principals while the other policies may cover these aspects as well. It is necessary to go through every word of the policy to interpret the meaning properly so that you can make the right decision with ease. The Chartered accountants in India can also use the comparison sites available online to get an estimate of the cost and the details of the policy.
4.Period of claim
The professional indemnity insurance is based on the claims to be made so be sure that you apply for the claim within the period of the policy. If you consider the date on which you received the advice or the day of the loss, you will not be entitled to get the benefits covered under the policy. For the Chartered Accountants in Pune, lapse in the policy will debar you from claiming when you need. If you have a firm in this city, consulting an expert to analyze the basic aspects of the professional indemnity insurance makes real sense.
5.What is retroactive date
The policy based on claims to be made by the parties contains an exclusion that eliminates the coverage made on those events that may have taken place before a date, which is also known as the retroactive date. Ideally, your policy must be active and this date must be pushed back far enough so that you get adequate protection when needed. Find out Whether the Chartered Accountants in Mumbai fall under this policy.
6.Protection for sub-contractors
This is an important issue you must consider before choosing a professional indemnity insurance policy. Try to find out after reading the policy whether it also offers coverage for the sub-contractors if they are a part of your business. Does the Chartered Accountants in Delhi hire contractors or sub-contractors related to their profession? What kind of protection do they need? Get a reply for this question before digging deep to look for a suitable insurance policy.
Is this policy enough
Before you go further down to look for suitable policy, you must try to find out whether the tenets of the professional indemnity insurance is enough to provide the coverage you need. For instance, you may also need to top this policy with another management liability policy if you spot some risks emerging from the human resource of your firm. You may also have a huge online data bank for which additional coverage may be required. Try to weigh the options carefully before arriving at a decision.
Seema Mehra is a Chartered Accountant at Ashok Maheshwary & Associates, is one of the top due diligence firms in India that provides best statutory audit in india in a convenient manner. She is a professional writer and loves to share business related topics.