Are you (In)Sure(d)? Q&A with CPA insurance experts.

• Author: Brunsman, Joseph E.
• Position: Practice management - Interview

daniel W. Hudson and Joseph E. Brunsman are graduates of the United States Naval Academy who, after serving in the Navy, founded a brokerage in 1995 specializing in practice insurance for CPA firms.

"Our goal is to fundamentally change the way that CPA firms purchase and utilize their insurance on a national level," says Brunsman, who wrote a book on the topic with Hudson. The book, "True Course: The Definitive Guide For CPA Practice Insurance," came to our attention via our own insurance gurus at CAMICO, and is available at no cost at www.cplbrokcrs.com.

We drilled a little bit deeper with the authors to find out more about why they wrote the book and the importance of CPA insurance.

Why Write the Book?

Brunsman: As an engineer and a former Naval officer, I always had a reference: Everything from how to launch a Tomahawk missile to lacing your shoes. Entering this industry, I thought it was unusual that firms arc spending money on something they know relatively little about. Also unfortunate is that novice brokers are selling policies they've never read and typically don't understand. It's the only industry I can think of where this dynamic still occurs on a large scale. As we say in the Navy, "Trust, but Verify."

What Are Some Misconceptions About Professional Liability Insurance?

Hudson: You can't get the same insurance for 20 percent, or more, cheaper. If you do, you're giving up something significant. The insurance industry is perhaps the most data intensive industry in the world. No one company can realistically claim to have the right formula, while offering the same type and quality of services as the main players. If you have a claim with a discount insurer, your firm's reputation may be at the mercy of an organization that has only limited staff, or lacks expertise to deal with your complex issues. That's a painful experience.

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How Should CPA Firms Determine What Insurance is Best, and How Much?

Hudson: To begin, make sure that you're working with the right broker. Chapter 2 of our book, "Warning Signs," will help you steer clear of novice brokers. Many may mean well, but haven't invested the time necessary to adequately advise your firm. Chapter 3, "Four Simple Questions," will help you narrow down the insurance companies that might be the best fit, particularly having the resources and expertise to manage the complexities of accountants' professional liability.

Brunsman: As for coverage limits, it really...