Liability in accounting takes many forms. A competitive industry like accounting generates an atmosphere where full-time positions might be filled without proper vetting of a candidate, leading to loss. There are also independence liabilities that occur when firms have close relationships with clients. Despite all of this, potential damage caused by errors and omissions remains the most common type of risk associated with accounting.
This type of liability in accounting is also common in professions such as real estate and law, and even in insurance itself. It has to do with mistakes such as typos or bookkeeping errors, or the omission of data due to either oversight or the poor organization of documents.
How do you know if your organization needs this type of coverage? The short answer is that you almost certainly need it. If you deal with important client information in any way, such as financial documents, covering potential damage caused by mishandling should be a high priority. Errors and omissions risk mitigations are usually the primary features in an accounting business policy. This is because they provide a venue other than the law in which to recoup a major operational loss and mediate disagreements.
Protecting against one of the major risks in the accounting business is not as simple as you might think. Fortunately, there are skilled agents who can help you out through a thorough analysis of your business and its needs.