New ACCA PII Regulations

Oh, and if you have employees, you’ll need employer’s liability insurance too.

Do accountants need insurance?

We do not advise or tell you which product to buy; undertake your own due diligence before entering into any agreement. The amount of insurance an accountant needs depends on whether or not they're a chartered accountant, with which professional body they hold membership and how much they collect in fees. Let's look at how these factors affect the limit of professional indemnity insurance (PII) an accountant needs. Rated 4.7 out of 5 stars on Reviews.co.uk Chartered accountants must have a professional indemnity insurance (PII) policy, and this policy must meet certain requirements. For starters, PII for a chartered (or chartered certified) accountant must be considered 'qualifying insurance'.

16.5 Run-off cost for sole practitioners

Underwriters issuing qualifying insurance agree to abide by certain minimum terms on accountant PII, to make sure all chartered accounts maintain a certain standard of protection. Next, chartered accountants have to abide by certain minimum limits of insurance as stipulated by their accountancy body membership (e.g., ICAEW, ACCA). The required amount of professional indemnity dictated by these bodies is linked to fee income (both annual fee income and largest client fee income). BUT many accountancy businesses need to hold more depending on their fees and the work they do. Let's have a look at the minimum PII requirements as stipulated by the Institute of Chartered Accountants in England and Wales (ICAEW) and the Association of Chartered Certified Accountants (ACCA), since these are the two largest accountancy bodies in the UK. Professional indemnity (PI) insurance is mandatory for all ACCA accountants with a certificate to practise. Your ACCA insurance must also provide a minimum level of cover, which is proportional to your income and works out like this: Annual income less than £600,000: whichever is greater – 2.5 times your total income or £100,000.

• Public Liability insurance is not a legal minimum but is often required for contracts and leases.
• Professional Indemnity insurance is a legal requirement for certain professions like financial advisors.
• Motor insurance is a legal minimum for any company vehicles, with at least third-party cover.
• Product Liability insurance may be required if you manufacture, supply, or repair goods.
• Directors' and Officers' Liability insurance is not legally required but is critical for risk management.

Annual income over £600,000: £1.5 million. If you’re in partnership, have fellow directors, or employ full-time or part-time staff, ACCA wants you to have Fidelity Guarantee Insurance (FGI) - with £100,000 as the minimum level of cover.

Table of contents

When the numbers don’t add up Your clients expect the utmost care and attention. That’s perfectly understandable when it’s their money in your hands. But what happens if you make a mistake? The kind that can cost you time, money and your reputation? Scroll down to find out exactly what you need.

How much does it cost?

If you’re not chartered, you don’t strictly need accountants’ insurance. If you’re licensed to practise accountancy by ACCA, AAT, ICAEW, ICAS or CIMA, then bet new betting offers today you do. But as ever, there’s a big difference between what’s needed and what’s best for your business. Everyone’s capable of making an error, so it makes good sense to have professional indemnity insurance for accountants. It protects you if a client claims your work doesn’t add up and pays your legal expenses as well as any damages. FGI covers you for theft by your employees and should include your sub-contractors too.

If you cease trading, ACCA says you need at least six years’ worth of run-off cover.

The regulatory backdrop — what ICAEW, ACCA and AAT require

Under the ICAEW Professional Indemnity Insurance Regulations (effective September 2024), the previous £100,000 minimum has been abolished. For 2026, most chartered accountancy firms are now required to maintain a minimum limit of indemnity of £2 million for any one claim and in the aggregate. However, for smaller practices with a gross fee income of less than £800,000, the minimum limit is calculated as two and a half times the firm's gross fee income, subject to a absolute minimum of £250,000. Additionally, firms must ensure their policy excess does not exceed the higher of £3,000 or 3% of their gross fee income. As of 2026, the ACCA has simplified its requirements into two primary income bands, having increased the absolute minimum limit from £50,000 to £100,000.

The Market for Accountants Professional Indemnity Insurance

For firms with a total income below £600,000, the required PII limit is the greater of two and a half times the firm's total income or £100,000. For firms with a total income of £600,000 or more, the minimum limit of indemnity is now fixed at £1.5 million. Note that the old '25 times the largest fee' multiplier has been removed from the standard calculation to simplify compliance. Accountants who are not chartered technically don't have any obligation to buy PII. That said, it is widely recommended for all accountants to have professional indemnity insurance. It takes care of any claims that could arise from work you did before you closed your business. It’s a good thing, considering problems can take months or even years to emerge. If you practise accountancy or bookkeeping under an AAT licence, you need professional (PI) indemnity insurance.

• Fines for non-compliance with Employers' Liability insurance are enforced by the Health and Safety Executive (HSE).
• Operating without required motor insurance can lead to vehicle seizure, fines, and penalty points.
• Breaching contractually agreed insurance levels can lead to contract termination and legal claims.
• Operating without mandated Professional Indemnity can result in disciplinary action from your regulatory body.
• Inadequate insurance can lead to personal liability for directors if the company cannot cover claims.

Your AAT insurance must work on an ‘any one claim’ basis, which means each claim is treated separately. So, if your level of cover is £100,000, your insurer will pay compensation up to that amount for each claim, as well as up to £100,000 in legal costs. You also need a minimum level of cover according to your type of business and income, which the AAT specifies like this: Sole traders: whichever is greater – £50,000 or 2.5 times the firm’s gross fee income.

Renewal of PII

If you’re asking yourself this question, ICPA can help. Accounting-specific insurers, like A-rated insurer AXA, understand the profession’s nuances and regulatory requirements. ICPA Pro, Premium, and Essentials members benefit from tailored cover provided by AXA, along with options to scale up affordably depending on your practice’s turnover and risk profile. Don’t leave your practice exposed to preventable risks. Whether you’re a sole practitioner or a growing firm, contact ICPA today to discuss how our professional indemnity insurance solutions can provide the protection and peace of mind your practice deserves.

Tailored Policies for Accountants

Sign up to our mailing list to receive weekly bulletins on all of the latest accounting news. ACCA's rules are changing in September 2023 ACCA is introducing new professional indemnity insurance (PII) regulations in September 2023. The new PII regulations are the first in a series of planned modernisation and improvements to the Global Practising Regulations and the ACCA Rulebook. However, members and firms will be given a period of time to adjust to the bet best odds guaranteed times changes and obtain PII cover which is compliant with the new regulations. The guidance on this site is based on our own analysis and is meant to help you identify options and narrow down your choices. Partnerships and limited companies: whichever is greater – £100,000 or 2.5 times the firm’s gross fee income. Anyone with a gross fee income over £400,000: £1 million worth of cover.

You could still be sued after you've finished trading

Minimum requirements are just a starting point, but real-world risks vary widely, and your actual coverage needs depend on the following factors. Fee income and client size: Bigger clients or higher-value engagements mean higher potential claims. And turnover alone doesn’t determine optimal coverage. A practice specialising in high-risk advisory work, for example, might need coverage exceeding what turnover-based formulas suggest. Type of work: Client profile significantly impacts risk levels.

Office insurance

Practices serving large corporations, high-net-worth individuals, or regulated industries face different risk exposures than those focusing on small businesses or personal tax work. Complex corporate restructuring advice carries different liability risks than basic bookkeeping services. Contractual obligations: Some contracts stipulate minimum cover levels. As a sole practitioner providing basic bookkeeping services to small local businesses, you might adequately manage risk with £250,000 coverage. However, if you were offering corporate tax advice to medium-sized companies, you would likely need £500,000 or more. The other proviso is that your AAT insurance must be ‘retroactive’, to cover work you did in the past. That’s because PI works on a ‘claims made’ basis.

How Apex helps

To figure out how much you need, you can still follow the guidance issued by the ICAEW and ACCA or speak with a specialist broker or agent regarding limits of insurance. We've calculated the minimum PII limits for accountants of various sizes according to ACCA and the proposed new ICAEW requirements in the table below. As you can see, we varied both the total annual fees and the largest fees earned from one client in the past year (which factor into the ACCA calculations). While these figures show a range of accountancy business sizes, if your business size is not displayed here then you can use the formulas shown in the previous section to calculate what you would need. Use these figures as a rough-and-ready guide to give you an indication of what is basically required; calculating the amount of insurance an accountant needs can certainly be a complicated answer.

Do I need to notify my regulation body of my PI insurance details?

A professional insurance specialist can help also you figure it out if you still have questions. Rated 4.8 out of 5 stars on Reviews.co.uk Protect your work, your reputation and your bank balance with professional insurance for professional people. Quote online in less than 2 minutes from £15.46 a month for £250,000 cover Professional indemnity insurance defends you against claims of negligence, breach of confidentiality, dishonesty, libel and slander. £1,000,000 for physical damage and injuries caused by your business £10,000,000 legally required cover for employers Based on an annual income of up to £40,000. Quote online bet best free bet no deposit no wager for turnovers up to £500,000, or call and talk to an expert. It means for a claim to be valid, your policy needs to be up and running both when the work was done and when a claim is made. If you’re a member of the ICAEW with a practising certificate and engage in public practice, professional indemnity (PI) insurance is essential. If you’re unsure if your business activities are considered public practice, read the ICAEW’s definition of public practice. The ICAEW says your PI policy must be with an insurer from its approved list – although rest assured that the insurers we use are on there, guaranteeing you the cover you need.