California business owners and entrepreneurs should have peace of mind regarding the ability and professionalism of their accountants. Some of that peace of mind may come in the form of the accountant’s malpractice insurance. Also referred to as errors and omissions insurance, or E&O insurance, malpractice policies apply to cover harm to clients resulting from misinterpreted or misleading statements, errors, breaches of professional duty, performance-related claims or professional negligence.
Clients have cause to place a high degree of trust in their accountants. For example, an accountant may have a fiduciary duty as the trustee or administrator of an estate or as an ERISA plan advisor, stockbroker or investment advisor. In many cases, the accountant’s duty is to maintain a reasonable professional standard of care.
Regardless of the standard of care required, professional accountancy errors can cause serious financial harm. Certified public accountants, even those working for the Top 100 U.S. firms, face allegations of malpractice at higher rates than most people realize. When choosing an accountant, it is important for individuals and business owners to determine if the accountant’s work is covered by malpractice insurance.
In a case where one has suffered harm due to the negligence, errors or malpractice of an accountant, it may be wise to consult an attorney. A lawyer with experience handling insurance litigation might be able to help by identifying possible avenues of recovery or attempting to negotiate settlement with the defendant professional’s errors and omissions insurer. An attorney could also gather evidence in support of a claim or draft and file a complaint for damages in civil court.