Accountants professional liability, cyber, and the funds-transfer exposure that sits between them — reviewed and placed by an independent Rochester Hills commercial agency for firms across Metro Detroit and Michigan.
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An accounting practice carries almost no fire risk and a great deal of financial and data risk. These are the policies that make up the program.
The core cover. Responds to allegations that services were performed negligently — a return prepared incorrectly, an election missed, advice a client says cost them money. Written claims-made, so the retroactive date matters as much as the limit.
Breach response, forensics, client notification, credit monitoring, data restoration and business interruption after ransomware. Michigan requires notification of affected residents following a breach of personal information.
A spoofed email inducing staff to move funds is usually neither a cyber claim nor a straight crime claim. These endorsements answer it, and typically carry sublimits far below the policy limit.
Employee theft, forgery and client-funds loss, separate from both E&O and cyber. Relevant to any firm that runs payroll, touches client money or holds signature authority.
Office contents, workstations and servers, tenant improvements, and business income while the office is unusable. Modest premium, but the income limit should reflect a firm that bills most of its year in two compressed seasons.
Clerical classifications are among the lower-rated Michigan codes, so comp is rarely the cost driver. Employment practices liability is the more likely professional-office claim, and wage-and-hour is commonly excluded or sublimited.
Professional liability is priced on what the firm does and for whom. These are the items that move the account.
The most common accounting claim is not fraud, it is a penalty. Clients assert that penalties and interest they incurred were the firm's fault. Whether the form reaches the tax itself or only the penalty and interest varies and is worth reading before it is tested.
Extension not filed, election not made, statute run on an amended return. These claims concentrate in the weeks after April and October, which is why carriers ask about busy-season staffing and workflow controls.
Audit, review and compilation work is rated apart from tax compliance because alleged damages are larger and third parties can assert reliance. Carriers ask for the attest percentage, peer review status and whether any client is a public company or benefit plan.
Trust accounts, payroll funding and signature authority widen the crime exposure well beyond ordinary office risk. Coverage should be scoped to what the engagement letters actually permit staff to do.
Signed engagement letters defining scope, deliverables and what the firm is not doing are among the first documents an underwriter asks about — and the first a defence counsel looks for. Advisory work performed without one is where scope disputes begin.
A single client representing a large share of revenue raises both the severity of a potential claim and the chance of a disputed engagement. Carriers ask for the largest client as a percentage of billings for exactly this reason.
A professional liability submission is mostly about what the firm does and for whom. Having these ready shortens the process and usually improves the terms.
Direct answers to what accounting firms ask before they move a program.
Most Michigan CPA and accounting firms carry accountants professional liability (E&O), cyber liability, and a business owners policy covering office property and business income. Firms with employees add workers' compensation, and many add crime coverage with social engineering and funds-transfer fraud endorsements, employment practices liability, and an umbrella. What a specific firm needs depends on services performed, client size, and the contracts it signs.
No. General liability responds to bodily injury and property damage, not to financial harm caused by professional services. An allegation that a return was prepared incorrectly, a deadline was missed, or advice caused a client a financial loss is answered by accountants professional liability, which is a separate policy.
Almost always. Claims-made coverage responds to claims first made while the policy is in force, subject to the retroactive date. That makes the retroactive date and continuity of coverage important: letting a policy lapse or resetting the retroactive date can leave prior work unprotected, and firms winding down usually need to buy an extended reporting period.
Not automatically. Many cyber forms cover breach response, data restoration and network liability but limit or exclude the voluntary transfer of funds induced by deception. That exposure is usually addressed by social engineering fraud and funds-transfer fraud endorsements, which frequently carry sublimits well below the policy limit and often require call-back verification procedures.
Accounting firms concentrate exactly the data attackers want: Social Security numbers, bank account and routing details, payroll records and full financial statements for many clients at once. Michigan requires notification of affected residents following a breach of personal information, and the cost of notification, forensics, credit monitoring and business interruption during a ransomware event is generally what cyber liability is bought to answer.
Generally yes once the firm has employees. Michigan requires workers' disability compensation coverage for most private employers, and clerical office classifications are among the lower-rated codes. Owners and officers may be able to exclude themselves depending on entity type, which is worth confirming before renewal rather than after a claim.
Titanium Shield Insurance Agency is an independent commercial agency in Rochester Hills. We review CPA and accounting firm programs based on the services the firm actually performs — the split between tax, attest and advisory work, how client funds are handled, and where the professional liability and cyber forms stop covering each other. Othon Economopoulos handles these accounts directly.