As an auditor, your role is crucial to your clients’ financial wellbeing. You are tasked with reviewing client tax and financial records to ensure they are correct and in compliance with all current government regulations. In some cases, you also review accounting practices and make recommendations for improvements. You may also look at a client’s other systems, policies, procedures etc. to ensure they are optimal. To make sure there are no errors or irregularities in your clients’ records, practices etc., you must provide a high level of scrutiny and accuracy.
By taking on this role, you expose yourself to a large amount of risk. The risks associated with this field are mainly missing something or making an error yourself during an audit. These consequences can be serious for your clients, and in turn also for you. It is critical that you protect yourself with the correct auditor insurance coverage.
What type of insurance do auditors need?
There are various aspects of an auditor’s business that need protection. Not only do you have to protect yourself from the possibility of error that may cause your client harm, but you also have to mitigate the risk of handling a large amount of sensitive client information. As with other businesses, you must also address the risk of operating a business with employees that is open to the public.
Here are some of the coverages that auditors should consider when building an insurance package:
Errors and Omissions Insurance: As mentioned, perhaps the greatest risk to an auditor is either missing something or making an error during an audit that comprises the client. This is professional liability coverage that will protect your business if a client sues due to errors or negligence on your or your team’s part that results in a financial loss.
General Liability Insurance: This is coverage that protects businesses during the general course of their operation from claims of property damage or bodily injury to third parties. This is a common and necessary coverage for most businesses.
Cyber Liability Insurance: This coverage is becoming more and more essential in today’s volatile and risky online world. Given the nature of the sensitive information your business deals with, it is imperative that you protect yourself from hacking or other malicious data occurrences. Data loss to malicious third parties is also not uncommon, and another risk you need to manage.
Property Insurance: This insurance applies to your business’ physical assets, including computer equipment and any property you own. Protect yourself from extreme weather, theft and vandalism with this coverage.
What are some cases when auditors need insurance?
- Your staff person missed an important piece of information in a client’s audit that results in them missing a deadline and owing a large amount of penalty fines. They in turn sue your firm for the error and the financial loss.
- A data backup fails and you lose a large amount of information from your system that requires hours to rebuild.
- Your client database is breached, resulting in a large leak of sensitive information.
- A customer slips and falls while using the washroom at your office and sues you for their injuries.
Find the Right Auditor Insurance from ALIGNED
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