Janardhan NAs an accountant, you’re the trusted expert who keeps businesses and individuals financially sound. But what happens when, despite your best efforts, a single decimal point is off or a new tax law is missed?
The truth is, even the most meticulous professional can face a claim of negligence.
Negligence in the provision of services accounts for 45% of total claims, according to a Marsh India report.
Your diligence and accuracy are exactly why clients trust you. However, the reality is that claims can arise from factors outside your control. A client may provide incorrect information, a staff member could make a data entry error, or there could be a change in tax law you were not aware of.
Claims against accountants, particularly those related to auditing services, are increasing. This trend is expected to continue through 2025 and beyond.
The total professional Indemnity Insurance market was valued at $5.5 billion in 2024 and is projected to grow at an 11.50% CAGR between 2025 and 2033.
In this blog, we will understand the importance of PI insurance for accountants and the risks faced by them
Mitigata – Best PI Insurance Partner for Accountants
As an accountant, your work is built on precision and trust. But even the most careful professionals can face claims – a missed detail in a tax return, an error in reporting, or a client misunderstanding can quickly escalate. That’s where Mitigata comes in.
We work closely with accountants, tax agents, and chartered professionals on a daily basis. With Mitigata, you don’t need to be an insurance expert. Just tell us how you operate – the kind of clients you work with, the services you offer, and the risks that keep you up at night. We’ll match you with PI insurance that fits, no jargon, no time-wasting, no generic templates.
Get ₹5CR of Professional Indemnity at ₹75,000/Year*
Professional indemnity cover at ₹75,000 per year saves you money while keeping your practice safe.
What makes us stand out from other insurers:
- Transparent pricing with no surprise fees or upsells
- Policies from India’s top insurers, tailored for accounting professionals
- End-to-end support, from comparing quotes to finalising paperwork
- Instant support when it matters most, especially during a claim
Accountants who choose Mitigata often say the same thing:
“You understood my business. You kept it simple. And when things went wrong, you were already on it.”
And that’s how we work!
Time is running out! Learn about the coverage limits and costs of Professional Indemnity Insurance.
What Is Professional Indemnity Insurance and How Does It Work?
Consider Professional Indemnity (PI) insurance as a professional backup. You need security for your practice, just as you would advise your clients to get proper life insurance.
Professional indemnity insurance, often known as errors and omissions or E&O insurance, protects tax experts and accountants from lawsuits by clients who claim you made a mistake that lost them money.
It is specifically designed for specialists like you who provide knowledgeable advice and services to clients, helping them make smart financial decisions.
Here’s what it covers:
- Negligence Claims
When a client says you didn’t meet professional standards. For example, if you missed a significant tax deduction during ITR filing and the client had to pay a penalty and interest to the IT department.
- Errors and Omissions
Mistakes or things you forgot to do. Like accidentally filing GST returns under the wrong category, which can lead to compliance issues and fines for your client’s business.
- Legal Defence Costs
The expensive part everyone forgets about – lawyer fees, court costs, and time spent defending yourself. Even if you win the case, these costs can run into lakhs.
- Misrepresentation Claims
When clients say you gave them wrong information. For instance, if you incorrectly advised a client about the tax implications of a property sale, and they ended up paying more tax than expected.
- Breach of Contract
When you don’t deliver services as promised. Maybe you agreed to complete audit work by March 31st for a client’s loan application, but delays on your end caused them to miss the deadline and lose financing.
Pay ₹75,000/Year* and Get ₹5 Cr* Professional Indemnity Cover
Join hundreds of doctors already protected by Mitigata with tailored indemnity cover and reliable claims support.
Why Accountants Need PI Insurance Now More Than Ever
The professional landscape for accountants has become a minefield of potential liability.
Every GST return you file, every tax advice you give, and every financial statement you prepare now carries higher stakes than ever before.
The statistics indicate a high alert: In 2024-25, the ICAI recorded the highest number of fines for chartered accountant misconduct in recent years.
241 CAs were found guilty and fined between ₹5,000 and ₹5 lakh, with suspensions ranging from 15 days to 5 years.
This marks a significant increase from the previous year, when only 91 CAs were reprimanded.
Also read
If you’re looking for a comparison guide, do check out this expertly curated list of top PI companies in India.
Real-world examples that should worry every accountant:
Example 1: A CA in Delhi advised a client to claim input tax credit on certain expenses. Later, a GST audit revealed those expenses weren’t eligible for ITC. The client faced penalties and interest of ₹ 8 lakh and sued the CA for professional negligence.
Example 2: An accountant miscalculated the advance tax liability for a manufacturing client. When the client received a notice for short payment of advance tax with interest charges of ₹12 lakhs, they demanded compensation from their accountant.
Example 3: A tax consultant incorrectly advised a startup about the GST registration threshold. The business operated without registration for eight months, believing it was below the limit. When caught, they faced registration penalties of ₹3 lakhs, plus back taxes, all of which were attributed to the consultant’s advice.
In today’s environment, where a single mistake can cost you lakhs in legal fees and damages, can you really afford to practice without it?
Risks Specific to Tax Agents and Chartered Accountants
The following are the specific risks that tax agents and chartered accountants face without Professional Indemnity (PI) insurance.
- Legal fees: Even if you are innocent, defending against a claim of negligence or error can cost tens of thousands of dollars. Without PI insurance, these expenses must be borne by the individual.
- Paying for Damages: If you are found liable, you must personally pay any damages, settlements, or judgments. This can result in tax penalties, lost business revenues, or personal financial losses due to poor counsel.
- Bankruptcy: A single, large claim could be financially ruinous, leading to the forced sale of personal assets or the total collapse of the business.
- Loss of Credibility: Being involved in an uninsured lawsuit can severely damage their professional reputation. In an industry built on trust and accuracy, a single claim can lead to a long-term loss of clients and an inability to attract new ones.
- Professional Disciplinary Action: Most professional bodies for tax agents and accountants mandate that members carry PI insurance. Operating without it is a breach of professional conduct and can result in fines, suspension, or the loss of their professional license.
₹5 Cr Protection Against Mistakes You Can’t Afford To Make
Conclusion
Accounting is a high-trust profession where even minor errors can carry major consequences. Whether you’re handling tax obligations, financial reporting, or advisory services, the risk of a client claim is always present.
Having the right PI insurance in place gives you the confidence to focus on your work without second-guessing every decision.
At Mitigata, we understand you and help you in securing the right PI insurance based on how you actually work.
Get your PI insurance quote through Mitigata today and secure your practice.
akshit k