PI insurance for start-up accountancy firms — ICAEW, ACCA, AAT and independents

The ICAEW requirement

ICAEW’s PII Regulations (in force since 1 September 2024) require a firm with gross fee income under £800,000 to hold 2.5 times that income, with a £250,000 minimum; larger firms need £2m for any one claim and in the aggregate. A new firm with no completed accounts uses an estimate of its first-year fee income.

ICAEW firms doing DPB-regulated investment business under the Designated Professional Body regime must also meet the DPB rulebook PII standards, which mirror the FCA MIPRU 3 requirement for FCA-authorised firms.

The ACCA requirement

ACCA Rule 8 requires ACCA-regulated firms to hold PII, with minimum limits set by ACCA guidance. Cover must be in place from firm registration.

The AAT scheme

AAT-licensed members offering services to the public have an AAT-mandated PII scheme with minimum cover levels. Cover is arranged through the AAT scheme broker.

Non-body-regulated accountancy firms

Non-ICAEW, non-ACCA, non-AAT firms doing accountancy work do not have a professional-body PII requirement. The firm still faces professional negligence liability under the general law and PII is strongly advised. Absent a body requirement, sizing is a commercial decision. A fuller description of a broker who places accountants PI every day sits on its own page.

First-year sizing

1. Fee income estimate for year 1 — drives the ICAEW 2.5x formula and the base premium.
2. Practice mix — audit, tax, corporate finance, R&D tax credits, tax-scheme advice.
3. DPB-regulated activity — yes/no, and if yes what type of investment business.
4. Personal claims history of the founding accountant(s).
5. Cover limit choice — 2.5x formula floor for ICAEW, or commercial choice for non-body firms.

Run-off from the previous employer

A departing accountant from an existing firm continues to enjoy PII cover under the old firm's policy for prior acts, provided the old firm maintains PII. ICAEW requires two years of run-off cover after a firm ceases, then all reasonable steps to keep cover in place for a further four years.

Confirm: (1) prior acts at the old firm captured under the old firm's policy; (2) old firm will maintain run-off for the required period; (3) DPB-regulated activity has continued cover through the transition if relevant.

Your first policy: timing and continuity

Arrange cover as part of setting up the practice, alongside registering with your professional body and HMRC, so it is in force from your first paid engagement. Your duty of care starts with the first job, and early engagements, with new systems and processes, are where mistakes are most likely.

PI is written on a claims-made basis: the policy that responds is the one in force when the claim is made, not when the work was done. For a new firm that means:

• Continuity matters. A lapse, even a short one, can leave a claim that arrives during the gap uncovered, although you were insured when you did the work. Renew on time every year.
• Protect the retroactive date. For a new firm it is essentially the date you started practising. Keep it unchanged when you renew or move insurer so your earliest work stays covered.
• Check client requirements. Larger clients, lenders and formal contracts often require a stated limit before they will engage you, so find out before you buy. Size the limit to the value of the transactions your work touches, not just your fee.
• Avoid the usual first-policy mistakes: buying after the first engagement, treating the minimum as a target, understating projected fee income (which undermines the duty of fair presentation), and adding tax advisory, payroll or company secretarial work later without telling the insurer.

Frequently asked

Related reading

• Non-ICAEW accountants route-selector
• ICAEW PII Regulations — the 2.5x formula explained
• Accountants ICAEW hub
• DPB regime and PII — deep dive