CPAs are often so busy that they don’t recognize or acknowledge a potential claim as it is developing. This can be particularly devastating when the damages claimed are significant and are not covered because of late reporting. It’s important to pay attention to potential issues and to report them as soon as there may be a problem.
Early reporting will help assure coverage for the potential claim, and the firm may receive additional included benefits. It is also critical to avoid admitting liability, assuming damages, voluntarily making any payments, or incurring claims expenses without the prior written consent of the insurance company. Policyholders should not take action without first receiving guidance from a risk advisor with the insurance company.
By utilizing your insurance program’s advisory, loss prevention and risk-management services, a CPA firm can better manage the risks that lead to claims. Some of the basic risk-management tools, such as client screening, engagement letters and follow-up documentation, are crucial in managing potentially major problems. The more tools and resources an insurance program provides its policyholders, the better policyholders will be at avoiding or minimizing problems and disputes.
Managing CPA liability risk exposures is a complex process, and it’s easy to underestimate the potential for risk along the way. The CPA firm should always feel comfortable about contacting its agent and liability carrier and asking questions about any matters, regardless of how small they may appear to be.
CAMICO encourages CPAs to contact the company in a variety of ways. For example, a 50 percent reduction in the deductible, up to $50,000, is provided for the early reporting of a potential claim during the policy period in which it becomes known. Further, if it is determined that it is appropriate to retain legal counsel to assist with a pre-claim situation, CAMICO will absorb the legal expenses, help policyholders achieve a resolution with the client, prepare a tax penalty abatement request, draft talking points for communicating the facts of the situation with the client, and provide subpoena and other consultation services if the need arises.
In the event a potential claim is not timely reported by the insured, CAMICO’s “continuity of coverage for potential claims” helps eliminate coverage gaps for potential claims known to an insured and not timely reported by the insured, while coverage is consecutively renewed with CAMICO. However, the 50 percent deductible reduction for early reporting would not apply.
The information provided is a general overview and not intended to be a complete description of all applicable terms and conditions of coverage. Actual coverages and risk management services and resources may vary and are subject to policy provisions as issued. Coverage and risk management services may vary and are provided by CAMICO and/or through its partners and subsidiaries.
