Insurance for a new accountancy practice
What an accountancy practice is actually exposed to
Most claims come out of work that looked routine. A return prepared on information that turned out to be incomplete, and the assessment that follows. An election missed, where the loss is the tax the client would not otherwise have paid. Accounts prepared for one purpose that the client then uses to borrow against, with a lender saying afterwards that the figures were wrong. Payroll and VAT errors, small individually and repeated monthly.
Advisory work is where the numbers get large. Advice on structure, on remuneration or on a disposal is measured against the position the client would have been in had it been right, which bears no particular relationship to the fee.
Two features make the exposure worse than a fee note suggests. A small practice can advise on a transaction many times its own size. And accountancy relationships run for years, so an error is often repeated annually before anyone spots it — by which point there are several years of it, and an argument about whether that is one claim or several. Our note on aggregation in accountancy PII explains why that argument decides how much cover is actually available.
What cover a new practice needs, and why
Professional indemnity is the core, and for most practices compulsory. It answers civil liability arising from the services described on your schedule, so that description has to match what you actually do rather than what your certificate allows. It is claims-made: the policy that responds is the one in force when a claim or circumstance is notified, not the one in force when the work was done.
Cyber and crime cover deals with what professional indemnity is not built for. A practice holds financial data for every client it has and moves payment instructions by email; the realistic loss is a compromised mailbox, an altered bank detail and a payment to the wrong account, sometimes the client’s money and sometimes your own.
Public liability if clients come to your office or you go to theirs — the difference between that and professional indemnity is set out separately. Employers’ liability from the moment anyone works under your direction, including part-time help taken on for January, under the Employers’ Liability (Compulsory Insurance) Act 1969 — the requirement is here. Office contents and business interruption on the ordinary commercial basis.
What your professional body expects of a new practice
This is a condition of practising rather than a market convention. The body that issues your practising certificate sets minimum terms: a minimum limit of indemnity, a minimum wording or a list of required features, and a period of run-off after the practice closes. A practice regulated by more than one body has to satisfy the strictest.
For ICAEW firms the requirements sit in the ICAEW Professional Indemnity Insurance Regulations. The version effective from 1 September 2024 sets the minimum limit of indemnity at £2 million for any one claim and in the aggregate in each policy year, with an alternative for smaller firms: where gross fee income is below £800,000, two and a half times gross fee income subject to a floor of £250,000. On run-off, an individual ceasing public practice must hold at least two years, and a ceasing firm two years and then all reasonable steps to keep cover in place for a further four. Those figures are taken from the regulations published at icaew.com and were checked in August 2026.
If another body regulates you — ACCA, AAT, CIMA or the equivalent — the structure is similar but the numbers and the wording requirements are not, and requirements are revised. Work from the current version published by your own body rather than a figure quoted on a broker’s website, including ours. Send us the regulation and we will confirm a quote meets it before you buy.
What clients and contracts typically require
Most owner-managed clients never ask. Larger ones do, usually as a line in a procurement questionnaire specifying a class of cover and a minimum limit. Check whether the limit demanded exceeds the one you hold, and whether cover must be maintained after the engagement ends — the second is a running cost of the job and belongs in the fee.
Remember too that a regulatory minimum is the level below which you cannot practise, not a view of what a claim would cost — choosing a limit is a separate exercise. Your own engagement letters pull the other way: a clear scope, a statement of what the work is not for, and a liability cap where your regulations allow one are the cheapest risk management a new practice has — see engagement letters and liability caps.
What an underwriter wants to see from a practice with no trading history
In place of accounts, they look at the people and at the shape of the work.
The split of the work — compliance, tax, payroll, bookkeeping, advisory, corporate finance, insolvency, audit — as percentages of expected fee income. This is most of the price, and accounts for owner-managed businesses is a different risk from transaction support. Audit, insolvency, probate and investment business carry their own registration requirements too.
Where you did this work before. Firms, roles, dates, and the type of client you handled. This stands in for a trading history: a qualified accountant with a decade at an established practice is a known quantity with a new company number. Expect a question on concentration too — one client at a third of the income is a different profile from forty small ones.
Claims, complaints and circumstances, asked of the individuals as well as the entity, after full enquiry. Anything capable of attaching to you personally from previous practice is disclosable: a disclosed matter is a rating factor, an undisclosed one a coverage argument later.
How you will work. Standard engagement letters, who reviews what before it goes out, how you handle changes to bank details, and what software you use. Describing the system you intend to run is a real answer, and a better one than saying it is too early to know.
The general checklist is in what you need to get a quote, and what drives the price explains which of these levers moves the premium.
Getting cover in place before the first client
Arrange inception on or before the date you begin chargeable work. Because the cover is claims-made, work done in an uninsured gap is not retrospectively protected by a policy bought afterwards: the later policy carries a retroactive date and excludes what you already knew about. If you did related work as a sole trader before incorporating and want it brought in, that has to be asked for and agreed.
Work done for a previous employer stays on that employer’s policy and does not travel with you. Allow time, too: cover on a specific regulatory wording is not a same-afternoon job, and evidence of it is often needed before registration completes. Cover before you start trading works through the mechanics.
Frequently asked questions
Is professional indemnity insurance compulsory for accountants?
For members in practice it is generally a requirement of the body that issues the practising certificate rather than a matter of general law. That body sets the minimum limit, the wording and the run-off period, so the answer comes from your own regulations, in their current version.
What limit of indemnity does a new ICAEW firm need?
Under the ICAEW Professional Indemnity Insurance Regulations effective 1 September 2024, the minimum is £2 million for any one claim and in the aggregate in each policy year, or, for a firm with gross fee income below £800,000, two and a half times gross fee income with a floor of £250,000. That is the floor for practising rather than a recommendation, and the regulations are revised — confirm the current position at icaew.com.
Does my policy have to be on my professional body’s approved wording?
Some bodies prescribe a minimum wording, and some restrict which insurers are acceptable. A policy that is cheaper because it omits a required feature is not a saving. Confirm the position for your own body before comparing quotes.
What happens to my cover if I close the practice?
Claims-made cover stops responding when it is not renewed, which is why run-off exists and why professional bodies require it. ICAEW requires an individual ceasing public practice to hold at least two years, and a ceasing firm two years plus all reasonable steps for a further four. Other bodies set their own periods.
Do I need to tell my insurer if I take on a different kind of work?
Yes. The business description on the schedule drives both cover and rating, and moving into audit, insolvency, probate, investment business or corporate finance is a material change. Tell your broker when the plan forms, not at the next renewal.
Related reading: Insurance for a new business · Accountants’ PI insurance guide · What you need to get a quote · Cover before you start trading
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice on a specific policy.