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Does a bookkeeper need insurance

Do bookkeepers need professional indemnity insurance?

The Institute of Certified Bookkeepers recommends that practising bookkeepers in the UK should have some level of professional indemnity insurance. Namely at least £50,000 or 2.5 times of the annual turnover.

Not all bookkeepers are adequately insured

We have recently run a survey to ask bookkeepers a series of questions on this subject. The findings were rather surprising:

44% of the surveyed UK bookkeepers are not insured.

Given that bookkeepers have an intimate insight into and deal with their clients' finances, it is rather shocking to learn so many self-employed bookkeepers don’t protect their business with business insurance.

1/3 of bookkeepers have had an issue with a client

A third of bookkeepers that took part in our survey experienced a client either refusing to pay their invoice, demanded a refund or tried to sue.

This number was expected. When things go wrong with their finances, clients tend to turn to their accountant or bookkeeper for answers. Clients rarely blame themselves.

The value of professional indemnity insurance

We have learned that:

The average cost of resolving the situation was nearly £3,000.

One would hope that all of those bookkeepers were insured as these are the types of situations professional indemnity insurance is designed for.

The more worrying fact is that:

Almost a third out of those not insured think professional indemnity insurance for bookkeepers is a waste of money.

This fact is likely down to a bad claim experience or poor service from an insurance provider.

Very occasionally business owners think they’ll never have to face a disgruntled client. Unfortunately this lack of imagination runs across all industries.

We happen to know that, despite doing everything right, some in this profession have appreciated the importance of bookkeepers insurance.

Why does a bookkeeper need insurance?

Professional indemnity insurance protects bookkeepers against accusations of mistakes by unhappy clients. Clients may withhold a payment, demand a refund or threaten to sue if they believe their bookkeeper’s activities cost them money.

The cost of professional indemnity insurance, which is designed to deal with these types of situations, starts at little as a few pounds a month.

If you’re falling into that astonishing two thirds of uninsured bookkeepers, ask yourself whether for the sake of a few pounds a month, it’s worth leaving your business exposed to expensive legal claims.

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