20/10/2008
Top questions to ask about potential professional indemnity insurance policies
These questions are aimed to provide you with the information to know the answers and be comfortable with what you are getting!
1. Does the policy cover every aspect of your bookkeeping/consulting business?
It needs to include that you provide all aspects of bookkeeping work from set up and install of accounting software and systems, both manual and computerised. Setup may include debtors, creditors, stock, chart of accounts and payroll. It needs to include that you provide processing services being everything from entering invoices and payments into the system, performing payroll calculations and making payments. It needs to include that you may set up the format of sales invoices and then create invoices. It must include that you perform bookkeeping reconciliation duties in relation to bank accounts, loan accounts, credit cards, petty cash, inter company loan accounts. It must include that you perform end of month or quarter reporting work including provision of information that may be used for preparation of the business Activity Statements. It must include that you provide services preparing the information at the end of the year for provision to the accountant. It must include work you do to reconcile the payroll records and prepare payment summaries for the employees.
It must include work you do as a “BAS Service Provider” or providing “BAS Services” under the current legal obligations of Sn 251L.
It must include work you will do as a BAS Agent under the proposed revised law.
2. Is there any bookkeeping/administrative/accounting duty or role you may do for a client that the policy does not cover?
3. You have employees that work for you providing these services to the clients – are they covered? How do I get them covered at what cost?
4. You have contractors that work for you providing these services to my clients – are they covered? How do you get them covered at what cost?
5. You may work at your premises or your home or at the clients premises – are all these locations covered including any employees or contractors?
6. How is the premium calculated i.e. on level of turnover or on what other factor?
7. Given your level of turnover of $_________ what is the all up all costs included total premium you will pay. (i.e. don't exclude stamp duty or any levies etc)
8. At what level of turnover do I need to advise you and therefore if there is a premium adjustment what is that adjustment likely to be?
9. Is this policy just your policy or is it linked to others in some way? (i.e. is it a grouped, pooled or master policy and what do each of those mean? How are they different form a standalone policy issued to just you?)
10. Are all and every type of legal costs and any persons charges to you for helping you in defending any action, and any penalty, interest, damages claim covered by this policy and to what extent?
11. You could be sued for penalties and interest charged by government or for damages to a client – are all these covered in every extent? Is there any limitation to what is covered?
12. Are your costs of defending an action included in the cover level or are they in addition to the level of cover? (i.e. You have a $250k level of PI cover, does that include legal costs or are legal costs also covered by the insurance but are paid in addition to the $250k level)
