Tax preparer’s exposure to liability claims from clients is more significant than many may appreciate, and E&O Insurance (also called Errors & Omissions Insurance or Professional Liability Insurance) and Cyber Risk Insurance are essential protections (see Cyber exposures here). A recent article in AccountingToday entitled Season of Risk: Preparers Face Malpractice Suits (here) notes the exposures:
- Tax claims against accountants are about 33% of claim payments, but about 66% of all claims
- Individuals bring about 33% of all tax related claims
- Corporate and partnership return related claims are about 50% of all claims
- Claims can also arise from a client changing from one preparer to another
Tax preparers, like all accountants, also have significant cyber risk exposure from their tax preparation practice, and should have Cyber Risk Insurance (also called Data Breach, Privacy and Network Security insurance coverage). Many of these incidents involve tax refund fraud (see our prior post) on both the federal and state level. A recent article (here) noted that health care records are in some cases beginning to be valued as highly by criminals as full income tax records stolen from accountants, which have the highest value. And cyber risks may be a more significant threat than more traditional E&O insurance claims:
During the past tax season, cybersecurity incidents continued to dominate as the primary pitfalls in the tax preparation landscape
Along with E&O Insurance, Cyber Risk Insurance is an essential coverage for businesses of all sizes for protection from both criminal attacks and employee error; it should not be optional. Coverages vary widely, and so a thorough review is essential to ensure that comprehensive coverage is in place.
Tennant Risk Services is a specialty wholesale broker and underwriting manager, and delivers expertise, markets and exemplary services to our retail insurance agent clients in the placement of professional liability and specialty insurance (E&O, D&O, EPL, Cyber Risk, Specialty), including accountants E&O & Cyber Risk Insurance. We excel at hard to place or unusual accounts, and you may review our expectations here.
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