The right insurance protects your business, your income and your reputation when that happens. Whether you're a sole trader working from home or running a small practice with staff, this guide covers the cover most bookkeepers need, what's a legal or professional requirement, and what's worth considering.

 

Professional indemnity insurance

Professional indemnity (PI) insurance is the most important cover a bookkeeper can have. It protects you if a client claims you made a mistake, gave poor advice or were negligent in your work, and they lost money as a result.

PI typically covers your legal defence costs and any compensation you're ordered to pay, even if the claim turns out to be unfounded.

 

Is PI insurance compulsory for bookkeepers?

There's no general legal requirement, but if you're a member of a professional body it's usually a condition of practising. Always check your body's current rules for the level of cover you need.

Even without a professional body, many clients will ask to see proof of PI cover before they work with you.

 

Public liability insurance

Public liability insurance covers you if a member of the public, such as a client or supplier, is injured or their property is damaged because of your business.

It matters most if clients visit your home office, or if you work on-site at their premises. Picture knocking a client's laptop off their desk, or a visitor tripping over a cable in your office. Public liability covers the compensation and legal costs if they make a claim.

 

Employers' liability insurance

If you employ anyone, even part-time or temporary staff, employers' liability insurance is a legal requirement in the UK. It covers claims from employees who are injured or become ill because of their work.

You must hold at least £5 million of cover, and businesses without it can be fined for every day they're uninsured. If you're a sole trader with no employees, you usually won't need it.

 

Cyber insurance

Bookkeepers hold a lot of sensitive data: bank details, payroll records, tax information. That makes you a target for hackers and scammers.

Cyber insurance can help cover the cost of responding to a data breach, restoring systems after a ransomware attack, notifying affected clients, and handling any regulatory investigation. Some policies also cover losses from invoice fraud or phishing scams.

As a data controller under UK GDPR, you're responsible for keeping client data safe, so a breach can be costly even if you've done nothing wrong.

 

Other cover to consider

 

• Office and equipment cover: your laptop, software and office contents are the tools of your trade. Home insurance often won't cover business equipment, so check your policy.
• Legal expenses: helps with the cost of disputes such as unpaid fees or contract disagreements.
• Run-off cover: PI works on a “claims made” basis, so a claim is covered by the policy in force when it's made, not when the work was done. If you retire or close your practice, run-off cover protects you against claims about past work. Many professional bodies require it.

 

The right level of PI cover depends on your clients, turnover and the services you offer. Your professional body will set a minimum, but some clients may ask for more.

 

FAQs

Do bookkeepers legally need insurance? Only employers' liability is a legal requirement, and only if you have staff. But PI insurance is required by most professional bodies and expected by many clients.

I only do bookkeeping part-time. Do I still need PI? Yes. A mistake costs a client the same whether you work five hours a week or fifty. Part-time and newly qualified bookkeepers can often get cover at a lower premium.

Does my home insurance cover my business? Usually not. Most home policies exclude business equipment and liability, so speak to your insurer or a specialist broker.

What's the difference between PI and public liability? PI covers financial loss caused by mistakes in your work. Public liability covers injury or property damage to third parties.

Get the right cover with AccountancyPI

For most bookkeepers, professional indemnity is the cover that matters most, with public liability, cyber and employers' liability added as your business grows.

AccountancyPI has been arranging PI insurance for accountants and bookkeepers for 30 years. We know what professional bodies require, and we'll help you find cover that fits your practice and your budget.

Are you in need of cover? Get a quote with us today!