By: vish ks
Submitted: 2010-04-29 06:15:43 | Word Count: 534
There is a common misconception that doctors and lawyers are the only professionals in dire need of errors and omissions insurance. But, it is a fact that nearly every organization that provides a service to its client for a fee has E&O exposure. Also, professional requirements have been broadly defined in legal terms. So, professional liability insurance is the one that shields businesses from the unforeseen mishaps. Errors and omissions insurance, also termed as professional liability insurance, protects business organizations and individuals against claims of professional negligence by means of a variety of professional services. This will include errors or omissions that the company or organization actually made or that the client thinks were made. These claims are not covered by general liability insurance. Insurance for tax statement preparers, errors and omissions insurance, is particularly important for certified public accountants, qualified bookkeepers and tax people. Every year, in the United States, thousands of cases are filed against these people including these bookkeepers; and, in the wake of every corporate issue or scandal, brand new lawsuits come up.
The tax and audit landscape keep on changing for bookkeepers, tax preparers and accountants. Clients rely on these experienced and qualified professionals to become up to date and accurate. Anyway, no matter how brilliant or polished a tax preparer or bookkeeper is, problems can arise. Regardless of how clean or seamless their risk management procedures are, mistakes are likely to happen. If a client is audited on his tax returns, and there happens to be an error resulting from some simple miscalculations on the bookkeeper’s part, then the bookkeeper or the tax professional would be held responsible for that and will be charged some kind of penalties and interest the client was charged. Again, if the bookkeepers overlooked or failed to include some of the vital information provided by the client, they would surely be at fault. Even in the case of a client failing to provide an important piece of information to the bookkeepers and the client filing a frivolous suit, the bookkeepers or the tax preparer would still have to pay exorbitant charges to defend themselves.
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Some of the most minor mistakes have the potential to cause substantial problems for clients. And without errors and omissions insurance for these bookkeepers and tax preparers, a business firm or an individual bookkeeper would not be able to survive or weather even a single claim brought against them. Bookkeeper errors and omissions coverage aims at protecting the bookkeepers in similar situations where figures might have got miscalculated or some of the vital information was omitted. Regardless of whether it was the bookkeepers’ fault or not, they will be penalized due to the client's fault. Statistics show that when a major corporate scandal gets uncovered, racketeering lawsuits against bookkeepers are bound to increase. During the late 1980s, damage claims against bookkeepers were estimated to be between one and four billion dollars; a figure that exceeded the net capital of all the bookkeeping and accounting firms combined.
