Janitor Bob Posted February 27, 2014 Report Share Posted February 27, 2014 I currently have Professional liability (E&O) insurance through Norman-Spencer. Due to the number and type of my clientel (approx 150 low-moderate income...indiv. tax prep only...no advice, no bookeeping), I have only ever carried a $10,000 policy.....costing $176/year. It is renewal time and I am now wondering if I should pay $277 and bump that limit up to $25,000 I also do NOT have coverage for "Tax Advice" because in the past, I never offered advice beyond that which is related to a specific return issue....I'm just a preparation guy....but now I'm starting to get a LOT of clients having me run "what-if" scenarios to see the possible future tax-consequences of various actions. (i.e. If I take $7,000 from my 401k to pay medical bills, how will that affect my taxes next year?). In such cases, I always run the client a dummy "what-if" return for current year assuming thay had taken their action the prior year...so they can see what the affect would have been this year....then tell them the affect will be similar next year barring any tax law changes, of course. Is this considered "Tax advice"? If so, sould I add a "Tax advice" rider to my policy for an additional $71? What say all of you? Is $10,000 enough considering that mt clients are all low-moderate income.....even the wildest mistakes on my part would not have much of a dollar affect in amounts dur or penalties. Adder for tax advice? Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted February 27, 2014 Report Share Posted February 27, 2014 Yes to the adder for tax advice, because that is always open to interpretation by a judge and that judge may ave zero tax knowledge. 1 Quote Link to comment Share on other sites More sharing options...
Yardley CPA Posted February 28, 2014 Report Share Posted February 28, 2014 I agree with KC and would add the "Tax Advice" coverage. Has anyone ever filed a claim through their E&O carrier? Quote Link to comment Share on other sites More sharing options...
imjulier Posted February 28, 2014 Report Share Posted February 28, 2014 I called my carrier about a claim for about $1200 and found out this amount was less than my deductible. Also, after the call got the amount reduced to about $800. Agreed to split it with the client. Lucky enough that the client knew that mistakes happen and fully understood that this was a one-time issue and resolved for the future. Most of my clients are like this but I could see one or two flying off the handle. Quote Link to comment Share on other sites More sharing options...
michaelmars Posted February 28, 2014 Report Share Posted February 28, 2014 my e&o is for $2,000,000 and costs about $1300 per year Quote Link to comment Share on other sites More sharing options...
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