Why Professional Indemnity Alone Is No Longer Enough for Accounting Firms
For many accounting practices, professional indemnity (PI) insurance has long been seen as the cornerstone of risk protection. It’s required, familiar, and widely understood across the profession.
But the risk landscape for accounting firms has changed — and PI insurance on its own is no longer enough to cover the realities of how modern practices operate.
This doesn’t mean PI is less important. It means it now needs to sit alongside other forms of protection, particularly cyber insurance.
What professional indemnity insurance does well
Professional indemnity insurance is designed to protect accountants against claims arising from professional advice or services. This typically includes allegations of negligence, errors, or omissions that result in a financial loss for a client.
PI cover remains essential for:
Meeting professional body and regulatory requirements
Protecting against advice-related claims
Supporting legal defence costs
For many firms, it’s the first — and sometimes only — insurance they consider.
Where PI insurance stops short
What PI insurance does not do is provide comprehensive protection against the growing range of technology-driven risks facing accounting practices.
Many firms assume that because they handle data as part of their professional services, any data-related issue will fall under PI cover. In reality, this is rarely the case.
Common exclusions or limitations include:
Ransomware attacks
System outages and business interruption
Data recovery and IT forensic costs
Client notification and credit monitoring expenses
Regulatory penalties following a data breach
These risks typically sit outside standard PI policies.
Why cyber risk is now a business risk for accountants
Accounting practices hold highly sensitive financial and personal information. They also rely heavily on cloud platforms, email, portals, and third-party software to operate efficiently.
This combination makes them an attractive target for cyber incidents — not because they are careless, but because they are trusted.
Cyber incidents can arise from:
Phishing or compromised email accounts
Weak passwords or multi-factor authentication gaps
Third-party software vulnerabilities
Human error, even in well-run practices
Importantly, these incidents don’t need to involve negligence to cause serious disruption.
The case for bundling PI and cyber insurance
Increasingly, accounting firms are choosing to bundle professional indemnity and cyber insurance rather than treat them as separate decisions.
Bundling offers several practical benefits:
Clearer coverage boundaries between advice risk and cyber risk
Reduced administrative burden at renewal time
Better alignment between how risks actually arise
Greater confidence that major gaps have been addressed
For small and mid-sized practices, bundling is often the simplest way to achieve broader protection without overcomplicating the process.
Common misconceptions we hear
There are a few assumptions that regularly cause confusion:
“We’re too small to be a cyber target”
“Our software provider would be responsible”
“PI should cover that”
Unfortunately, size doesn’t reduce exposure, and responsibility often sits with the practice regardless of which systems are used.
Cyber insurance isn’t about expecting something to go wrong — it’s about being prepared if it does.
What to review before your next renewal
Rather than asking whether you need cyber insurance, a more useful question is whether your current cover reflects:
The systems you rely on
The data you hold
The services you provide
The expectations of clients and regulators
A simple review can often reveal whether your protection has kept pace with your practice.
A practical next step
If you’re unsure how your current cover stacks up — or whether PI alone is leaving gaps — a short risk review can help clarify things.
Abacus Australia offers a Risk Assessment designed specifically for accounting practices. It highlights where PI cover may stop short and whether additional protection, such as cyber insurance, should be considered.
👉 Complete the risk assessment here:
Being informed is far easier than being caught out.
