Bookkeeping as a profession is a little risky. It’s important that only well-trained, educated, responsible individuals be responsible for the books of large companies. Minor mistakes can wreak havoc with balance sheets. Mistakes can give investors incorrect information. For these and other reasons, professional liability insurance for bookkeepers is vital for the protection of both the professional and their clients. Many larger clients will not even consider a bid from an uninsured bookkeeper. They want a minimum amount of coverage to protect them.
When you are a freelance bookkeeper this coverage is a necessity. Many clients will not work with bookkeepers that do not carry certain amounts of liability coverage. Can you blame them? If a freelance bookkeeper were to negligently handle the books of a company and that negligence leads to an audit or investigation that company must have recourse to recover any financial damages they suffer as a result of a bookkeepers negligence. That is exactly what professional liability insurance is for.
As a bookkeeper simple mistakes can happen. Most of the time there are protocols, such as audits in place to catch any mistakes before they do harm. Once in a while there comes along a bookkeeper that for whatever reason does not have there eyes on the books they are responsible for. There are also criminal situations that complicate the bookkeeping industry’s insurance needs. Of course, the vast majority of bookkeepers are honest, hard working, responsible individuals that pride themselves on the accuracy of their work. If they are given bad information, that is not something they can be held liable for. As long as any professional uses reasonable care and due diligence in the execution of their duties, they are not liable. Because of the bad apples, every bookkeeper needs insurance to protect their clients.
Looking at reasonable care and negligence as the legal standards, what to they mean exactly? The definition of reasonable care is usually given to a jury before deciding a case involving negligence. The jury is usually told that any person who, for example, operates their vehicle in a manner that is seen as fitting by others, is generally not acting negligently. In the case of a bookkeeper, if any financial professional takes the information they are given and records it as instructed, but does not knowingly have all the information they need to produce an accurate record, they cannot be blamed for negligence. The company would have been negligent in failing to provide the necessary information for an accurate record.
Bookkeepers Liability Coverage
This kind of insurance is not only a necessity to protect yourself but it is also necessary to draw in clients. Clients want to see that their bookkeeper is insured against Errors and Omissions. It is doubtful that most clients will ever have to file a claim, but it is still nice to know that that protection is out there. As a matter of fact, having adequate coverage is a selling point. It is you acknowledging you are human and you know that mistakes happen but you would never leave your client alone and responsible for any mistake you did make.
Wearing your professional liability insurance like a badge of honor is the way to operate. This necessary coverage is affordable and it shows everyone that you understand the incredible responsibility of your position. It is no different than showing off your education, training, and experience. Clients will appreciate the forthright approach. Take the time to find the right provider and get adequate professional liability insurance for bookkeepers coverage.