Auditor Insurance Policy Information
Auditor Insurance. As an auditor, you are responsible for making sure that the financial records of your clients are accurate and to assess and pinpoint any financial issues that may arise. Due to the nature of your business, there really is much room for error; however, no matter how meticulous you are, there's always a chance that something could go wrong.
Auditors are accountants who specialize in the review and verification of financial records, bookkeeping, and preparation of financial statements or taxes compiled by others. This service is offered to the general public, a specific firm, or group of client firms. An auditing firm may or may not carry the Certified Public Accountant (CPA) certification. The need for the CPA certification depends on the type of work the auditor will be providing and the purpose or type of financial statements the auditor will prepare for the client.
If a CPA certification is required, the auditor must have knowledge and experience in working with generally accepted accounting principles (GAAP) or statutory accounting principles (SAP), depending on the client. Often, the financial work done for the client needs verification that the research, review, and content of the statements meet specific acceptable accounting standards and this verification can be offered only by a CPA.
The background, education, certification, experience, and professionalism of the auditor are items to consider, as well as the type of audits performed. Some auditing firms offer such ancillary services as legal, business management, personnel, or miscellaneous consulting.
Protecting your business and yourself with the right type of insurance coverage is crucial. If something does go awry, you'll be protected from potential financial devastation. What type of risks to auditors face? What kind of auditor insurance coverage should they carry? Find the answers to these questions below.
Auditor insurance protects your auditing firm from lawsuits with rates as low as $47/mo. Get a fast quote and your certificate of insurance now.
How Much Does Auditor Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small auditing businesses ranges from $47 to $59 per month based on location, tyoes of audits done, payroll, sales and experience.
Why Insurance Is Crucial For Auditors
There are a lot of risks that come along with managing someone else's finances. For example, when auditing a business, your findings may indicate that they were in compliance with the standards and laws; however, another investigation finds that, in fact, the business wasn't compliant and they are hit with substantial fees. The organization may thing that you, the initial auditor, missed something, and as such, it's your fault that they now have to pay fines and fees.
Or, if you find that a business you audited isn't in compliance and they use the recommendations you noted to fix the issues you found, yet the problem wasn't corrected and they face additional fines and fees. In either case, you could be looking at a lawsuit.
Add to the above scenarios and the lawsuits that could be associated with them the fact that you may employ a staff, the property and supplies that you use to operate your auditing business, and the fact that you may travel to perform your duties and there are so many reasons why being properly insured is important.
Without insurance, you will have to pay any expenses that you are liable for out of your own pocket, including legal fees, property damages, and personal injuries; but, with the right auditor insurance coverage, you can avoid the financial repercussions that are associated with the risks that your auditing business faces.
What Type Of Insurance Should Auditors Have?
The specific type of insurance coverage you should carry depends on the unique features of your auditing business. For example, the type of clients you audit, the size of your organization, and where your business is located are just a few of the factors that will determine what type of auditor insurance you need and how much coverage you should carry.
However, regardless of the specifics of your business, there are certain types of insurance that all auditors should carry, including:
- Professional Liability - Also known as errors and omissions (E&O), professional liability insurance covers any professional mistakes or errors that you may make and anything that you might be overlooked or omitted. For instance, if someone sues you because you made an error while auditing their business, professional liability insurance will help to cover the cost of any legal fees, as well as the damages that you may be liable for paying.
- Commercial General Liability - In addition to professional liability insurance, auditors should also carry a commercial general liability insurance policy. This type of coverage protects you against property damage and bodily injury claims; if you spilled a coffee on someone else's computer while performing an audit or if a client tripped over equipment while visiting your office, commercial general liability insurance will cover any associated damages or medical care, as well as legal fees if a lawsuit is filed.
- Commercial Auto - As an auditor, chances are you spend a good bit of time traveling from one location to another to perform your duties. If you're involved in an accident while you're on the job, your personal auto insurance policy might not cover the damages. A commercial auto policy, however, would pay for any damages to another person's property if you cause an accident while you're traveling for work-related reasons.
These are just a few examples of the auditor insurance coverage that auditors should carry; other policies might include computer network security coverage, personal and advertising injury coverage, and commercial property insurance, just to name a few.
Auditing Risks & Exposures
Premises liability exposure is often limited since most client contact is done electronically or by mail. If clients visit the premises, they must be kept in designated areas so that they cannot view or overhear conversations regarding others clients' confidential information. To prevent slips, trips, or falls, all areas accessible to clients must be well maintained with floor covering in good condition.
The number of exits must be sufficient, and be well marked, with backup lighting in case of power failure. Parking lots and sidewalks need to be in good repair with snow and ice removed, and generally level and free of exposure to slips and falls.
Off-site exposures arise from physical reviews of records at clients' premises. There must be procedures for appropriate behavior. Complaints about auditors should be dealt with quickly.
Professional liability exposure is extensive. The exposure increases if the firm fails to conduct thorough background checks to verify employees' credentials and education, if clerical workers are allowed to do tasks that only the professionals should handle, or if error checking procedures are ignored or are inadequate. Very serious losses may result from failure to document decisions and actions or to secure client approval.
Workers compensation exposure is generally limited to that of an office. Because work is done on a computer, potential injuries include eyestrain, neck strain, carpal tunnel syndrome, and similar cumulative trauma injuries that can be addressed through ergonomically designed workstations. Some auditing firms have significant off-site work for audits, training, and similar activities. Workers can be injured by slips and falls at clients' premises or in automobile accidents.
Property exposure is generally limited to that of an office, although there may be some incidental storage or an area for meetings. Ignition sources include electrical wiring, heating, and air conditioning systems, wear, and overheating of equipment. Computers and other electronic equipment may be targets for theft.
Crime exposures are from employee dishonesty, which can be quite serious as auditors and their staff possess unique access to customers' financial information, including bank records and investment accounts. Potential for theft, directly or by means of identity theft, is great. Hazards increase without proper background checks, along with monitoring procedures and securing of all records to prevent unauthorized access.
All job duties, such as ordering, billing and disbursing should be separate and reconciled on a regular basis. Receipts should be issued for any cash payments received. Bank deposits should be made on a timely basis to limit the buildup of cash on premises. Audits should be performed at least annually.
Inland marine exposures are from accounts receivable if the auditor offers credit, computers and valuable papers and records for customers' information, which may be originals that are difficult to re-create. Power failure and power surges are potentially severe hazards. A morale hazard may be indicated if the insured does not keep valuable papers and disks in fireproof file cabinets to protect them from smoke, water, and fire. Duplicates should be kept off-site to allow for re-creation in the event of a loss.
Business auto exposure is generally limited to hired and non-owned. If vehicles are provided to employees, there should be written procedures in place regarding personal use by employees and their family members. All drivers must have appropriate licenses and acceptable MVRs. Vehicles must be maintained, and records kept in a central location.
Commercial Insurance And Business Industry Classification
- SIC CODE: Accounting, Auditing, and Bookkeeping Services, 7291 Tax Return Preparation Services
- NAICS CODE: 541211 Offices of Certified Public Accountants, 541213 Tax Preparation Services
- Suggested ISO General Liability Code(s): 41677
- Suggested Workers Compensation Code(s): 8803, 8810
To ensure your business is properly protected, speak with an experienced agent that specializes in auditor insurance.
Types Of Small Business Insurance - Requirements & Regulations
Perhaps you have the next great idea for a product or service that you know will appeal to your local area. If you've got a business, you've got risks. Unexpected events and lawsuits can wipe out a business quickly, wasting all the time and money you've invested.
Commercial insurance steps in to help you manage these risks, avoiding a situation which requires you to pay exorbitant costs out-of-pocket.
Insurance is so important to proper business function that both federal governments and state governments require companies to carry certain types. Thus, being properly insured also helps you protect your company by protecting it from government fines and penalties.
Small Business Insurance Information
In the business world, there are many risks faced by company's every day. The best way that business owners can protect themselves from these perils is by carrying the right insurance coverage.
The The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight.
Commercial insurance is particularly important for small business owners, as they stand to lose a lot more. Should a situation arise - a lawsuit, property damage, theft, etc. - small business owners could end up facing serious financial turmoil.
According to the SBA, having the right insurance plan in place can help you avoid major pitfalls. Your business insurance should offer coverage for all of your assets. It should also include liability and casual coverage.
Types Of Small Business Insurance
Choosing the right type of coverage is absolutely vital. You've got plenty of options. Some you'll need. Some you won't. You should know what's available. Once you look over your options you'll need to conduct a thorough risk assessment. As you evaluate each type of insurance, ask yourself:
- What type of business am I running?
- What are common risks associated with this industry?
- Does this type of insurance cover a situation that could feasibly arise during the normal course of doing business?
- Does my state require me to carry this type of insurance?
- Does my lender or do any of my investors require me to carry this type of policy?
A licensed insurance agent or broker in your state can help you determine what kinds of coverages are prudent for your business types. If you find one licensed to sell multiple policies from multiple companies (independent agents) that person can often help you get the best insurance rates, too. Following is some information on some of the most common small business insurance policies:
|Business Insurance Policy Type||What Is Covered?|
|General Liability Insurance||What is covered under commercial general liability insurance? It steps in to pay claims when you lose a lawsuit with an injured customer, employee, or vendor. The injury could be physical, or it could be a financial loss based on advertising practices.|
|Product Liability Insurance||What is covered under product liability insurance? I pays an injured party's settlement or lawsuit claim arising from a defective product. These are usually caused by design defects, manufacturing defects, or a failure to provide adequate warning or instructions as to how to safely use the product.|
|Commercial Property Insurance||What is covered under business property insurance? General liability policies don't cover damages to your business property. That's what commercial property insurance is for. It protects all of the physical parts of your business: your building, your inventory, and your equipment, giving you the funds you need to replace them in the event of a disaster. If you work from home, you might consider a Home Based Business Insurance policy instead.|
|Business Owners Policy (BOP)||What is covered under a business owners policy (BOP)? This is a policy designed for small, low-risk businesses. It simplifies the basic insurance purchase process by combining general liability policies with business income and commercial property insurance.|
|Commercial Auto Insurance||What is covered under business auto insurance? This type of insurance covers automobiles being used for business purposes. This could include a fleet of business-only vehicles or a single company car. In some cases it might cover your car or your employee's car while they're being used for business. These policies have much higher limits, ensuring you can cover your costs if one of these vehicles gets into an accident.|
|Commercial Umbrella Policies||What is covered under commercial umbrella insurance? This type of policy is a sort of "gap" insurance. It covers your liability in the event that a court verdict or settlement exceeds your general liability policy limits.|
|Professional Liability (Errors & Omissions)||What is covered under professional liability insurance? This type of business insurance is also known as malpractice oe E&O. It covers the damages that can arise from major mistakes, especially in high-stakes professions where mistakes can be devastating.|
|Surety Bond||What is covered under surety bonds? Bonding is a contract where one party, the SURETY (who assures the obligee that the principal can perform the task), guarantees the performance of certain obligations of a second party, the PRINCIPAL (the contractor or business who will perform the contractual obligation), to a third party, the OBLIGEE (the project owner who is the recipient of an obligation).|
Who Needs General Liability Insurance? - Virtually every business. A single lawsuit or settlement could bankrupt your business five times over. You might also need this policy to win business. Many companies and government agencies won't do business with your company until you can produce proof that you've obtained one of these policies.
Business Insurance Required by Law
If you have any employees most states will require you to carry worker's compensation and unemployment insurance. Some states require you to insure yourself even if you are the only employee working in the business.
Your insurance agent can help you check applicable state laws so you can bring your business into compliance.
Other Types Of Small Business Insurance
There are dozens of other, more specialized forms of small business insurance capable of covering specific problems and risks. These forms of insurance include:
- Business Interruption Insurance
- Commercial Flood Insurance
- Contractor's Insurance
- Cyber Liability
- Data Breach
- Directors and Officers
- Employment Practices Liability
- Environmental or Pollution Liability
- Management Liability
- Sexual Misconduct Liability
Whether you need any or all of these policies will depend on the results of your risk assessment. For example, you probably don't need an environmental or pollution policy if you're running an IT company out of a leased office, but you would need data breach and cyber liability policies to fully protect your business.
Additional Resources For Professional Services Insurance
Get informed about small business professional services insurance, including Professional liability, aka errors and omissions (E&O insurance), that protects your business against claims that a professional service you provided caused your client financial loss.
- Answering Service
- Attorney Lawyer
- Business Consulting
- Corporate Wellness
- Court Reporter
- Debt Collection Agency
- Detective Agency
- Electrical Engineering
- Environmental Consultant
- Executive, Career & Life Coaching
- Executive Search Firm
- Expert Witness
- Financial Services
- Financial Planner
- HR Consultant
- Mediator - Arbitrator
- Medical Billing
- Music, Drama & Dance Therapy
- Office Machine Repair & Maintenance
- Project Management
- Temporary Staffing
- Tax Preparer
Let's face reality. People today are claims conscious, resulting in a significant share of malpractice lawsuits against professionals.
Liability resulting from the rendering of or the failure to render professional services is excluded in most liability coverage forms. This means that a policy covering a account's or lawyers' office will cover liability arising out of the maintenance or use of the premises, but specifically exclude liability arising out of the rendering of a professional service or the omission of such a service.
In addition to the professions in which actual physical or mental injury may be caused to clients, certain other professions are exposed to claims for malpractice.
Claims may be brought against lawyers, accountants, architects, and similar professional persons for errors or omissions in their professional capacity. Errors & Omissions insurance pays damages that might be awarded to a plaintiff alleging professional negligence.
Professional liability policies are made available to such risks, and these policies provide essentially the same protection as is afforded under the physicians, surgeons or dentists professional liability policy.
Minimum recommended small business insurance coverage: Business Personal Property, Employee Dishonesty, Accounts Receivable, Computers, Valuable Papers and Records, General Liability, Employee Benefits Liability, Professional Liability, Umbrella Liability, Hired and Non-owned Auto Liability & Workers Compensation.
Other commercial insurance policies to consider: Building, Business Income with Extra Expense, Earthquake, Equipment Breakdown, Flood, Computer Fraud, Forgery, Money and Securities, Special Floater, Cyber Liability, Employment-related Practices Liability, Business Auto Liability and Physical Damage and Stop Gap Liability.