If you are confuse whether to let your professional liability insurer know about a potential claim, this article will help you determine when is the best time. It does not matter if you are part of a firm or a sole practitioner, it is important to protect your accountant liability insurance because you could be penalized with a premium increase if your insurer does not know about a possible claim.
You have nothing to worry about if you get a formal complaint from a client regardless if it is demanding payment or not. In this case, you will have to notify your insurer because any insurance policy coverage requires this to be done.
There are policies though that demands a more complex method when it comes to claim notification. You don’t want to find yourself in a grayspot just because you dealt with something that resulted to a loss or if the client has already expressed their intention to file claim regardless if the error was committed or not.
You have to determine your obligation by reading the policy given to you by your liability insurer. Go straight to the section containing information about notification and its definition. There are policies that mandate the accountant to notify right away once they know about potential claim that the client might have against them.
For those who are not sure, you can ring your insurer or broker because it is a better means of communication rather than emails. The only exception is that if the policy recommends that the claim notification should be done in writing. This is when you can ask for advice whether you need to file a claim notification through a letter or if you have to wait and observe before acting on anything.
Once a claim has been started, expect that you might have to pay premium coverage. It is still up to the insurer if they are going to make some changes with your premium especially if they have to pay for costs such as legal defense, investigation and fixing a problem to avoid claims. In any case, getting an accountant liability insurance is a win-win for professionals.