Insurance Essentials Every Bookkeeper Needs to Know

If you’re a bookkeeper running your own practice, you’ve probably wondered at some point: “Am I properly covered?”

It’s a question that doesn’t come up often — until something goes wrong. That’s why I sat down with Karen McDonald from Accountancy Insurance to unpack the essentials of professional indemnity, cyber protection, offshoring coverage, and advisory work. Whether you’re in Australia, New Zealand, the UK, the US, or Canada, these insights apply to you.

Because while insurance might not feel urgent today, it’s the safety net that protects the business you’ve worked so hard to build.

Why Every Bookkeeper Needs Professional Indemnity

Professional indemnity (PI) insurance is the non-negotiable foundation of any bookkeeping business. It protects you if a client claims they’ve suffered a financial loss due to your advice, an error, or an omission. Karen explained it best — PI isn’t like car or home insurance. It’s not about physical damage; it’s about protecting your professional reputation and financial liability.

You can be the most careful bookkeeper in the world, but mistakes, misunderstandings, or client misinterpretations can still happen. And even when you’ve done nothing wrong, legal defence costs can be significant.

I’ve always said that insurance helps me sleep better at night. Even if a client becomes unhappy, I know I’m protected.

Karen shared one story that really stuck with me: an accountant gave correct advice verbally but didn’t document it. The client acted differently, things went wrong, and a claim was filed. It cost the insurer $260,000 to resolve — even though the accountant hadn’t done anything wrong. The missing piece? File notes.

So here’s the takeaway: document everything. Follow up phone conversations with a short confirmation email. Save that email in your correspondence folder. Those notes are your first line of defence.

Cyber Insurance: It’s Not If, It’s When

If you think cybercrime is something that only happens to big corporations, think again.

Bookkeepers are prime targets because we handle sensitive client data and financial access. Karen told me that cyber insurance uptake among bookkeepers is still far too low — and that shocks me.

She explained that cyber policies are often misunderstood. Yes, they can cost more than PI, but they’re not expensive compared to the cost of a data breach. One bookkeeper thought cyber cover would cost $3,500, when in reality, Accountancy Insurance quoted them $1,100.

That’s roughly the price of a few coffees a week — and it could save your business.

I personally consider cyber insurance as essential as PI. Years ago, I had my identity compromised despite being extremely cautious. Fraudsters even opened a bank account in my name. It was a nightmare.

Cyber insurance helps with everything from data restoration to client notification and legal costs. And in today’s environment, with phishing, ransomware, and email compromise on the rise, it’s not optional. It’s critical.

Offshoring and Global Teams

More and more bookkeepers are hiring offshore support teams in places like the Philippines to stay competitive and efficient.

The good news? Accountancy Insurance fully covers offshoring.

Karen confirmed that you don’t need to pay extra or make special declarations. The only requirement is that you manage those offshore staff as you would local employees — check their work, maintain quality control, and ensure security standards are met.

On the cyber side, make sure the same safety protocols apply across your team — things like multi-factor authentication, secure backups, and password management. When filling out your cyber insurance questionnaire, your answers should include your offshore team as well.

This reassurance is huge for bookkeepers growing global teams. You can expand confidently, knowing your insurance has your back.

Advisory Work and Staying Compliant

Many bookkeepers are evolving beyond compliance work to include advisory, consulting, and coaching — which I love. But as your services expand, it’s vital to ensure your insurance policy keeps up. When I added advisory and recruitment services to my business, I reached out to Accountancy Insurance right away. They were calm, professional, and incredibly supportive. They simply asked a few questions about what we do, and within minutes, my coverage was updated.

Karen explained that advisory work is covered under their PI policy as long as it stays within the Tax Practitioners Board (TPB) or local equivalent guidelines for what a bookkeeper or BAS agent is permitted to do. That includes business advisory, cashflow forecasting, or systems consulting — as long as you’re not stepping into regulated financial or tax agent territory.

If you’re ever unsure, just ask your insurer or broker. It’s far better to clarify now than to discover later that something wasn’t covered.

File Notes, Scope, and Client Relationships

This episode was also a great reminder that documentation is your best friend.

Even if you have strong relationships with your clients, misunderstandings can happen. Most disputes don’t arise because of incompetence — they arise because expectations weren’t clear or documented.

I recommend three essentials for every bookkeeper:

1. File Notes: Keep records of any verbal advice or major discussions.

2. Scope of Work: Always have a signed engagement letter or service agreement outlining what’s included (and what’s not).

3. Correspondence Folder: Save important emails and client instructions as PDFs in a clearly labelled folder for each client.

These simple practices have protected my business for over 15 years. They show professionalism and give you confidence if questions ever arise.

The Role of a Specialist Broker

Another powerful takeaway from my chat with Karen was the importance of using a specialist broker — not a generic insurer.

General insurance providers often don’t understand the specific risks bookkeepers face. Their fine print might exclude key activities like remote work or offshore support. A specialist like Accountancy Insurance knows the industry and tailors coverage to your actual needs.

If you’ve ever Googled “cheap insurance” and bought a policy online, it’s time to reconsider. The difference in cost is minimal, but the difference in coverage can be life-changing if you ever need to claim.

I’ve always worked with brokers in both business and personal life. When things go wrong — and they sometimes do — having someone in your corner makes all the difference.

Final Thoughts

Insurance isn’t exciting, but it’s essential. It’s not there to make your business better — it’s there to protect the incredible business you’ve built.

Here’s what I want every bookkeeper to take away from this:

• Get professional indemnity and cyber insurance. Both. Not one or the other.

• Work with a specialist. They understand your risks.

• Document everything. File notes, scope, and client communications are your safety net.

The peace of mind you get from knowing you’re protected is priceless.

And as Karen reminded me, even if you never need to claim — that confidence lets you run your business from a place of security, not fear.

With love and strategy,

Jeannie Savage

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