National Guardianship Association » Policyholder Queries Result in Improved Coverage

In a now familiar sequence of events, questions raised by one policy holder have once again resulted in improved coverage for everyone. In this particular case the Assured's queries related to the optional Tax Preparer Endorsement, available under the Lloyd's Professional Liability Insurance program.

The Assured first noted that under the definition of Tax Preparer, "making tax payments" constituted an expressly covered activity. This created an ambiguity as to whether such work would only be covered by endorsement, and not under the standard covered capacities of Fiduciary or Daily Money Manager. In reviewing this question, underwriters acknowledged that making such payments should certainly fall within the basic scope of coverage under the unendorsed policy form. So the endorsement has been revised to remove this ambiguity.

The Assured next pointed out that in the endorsement's definition of Tax Preparer only Federal or State tax authorities are mentioned. So, what if the work performed relates to a tax levied by a local municipality, such as a sales, use or ad valorem tax. Because the endorsement was originally prepared with income and estate taxes in mind, the Federal and State reference did not appear to be a coverage restriction. However, in light of this Assured's contemplated activity of preparing sales and use tax returns the restriction was readily dropped by underwriters.

Thus, as recently revised, the Tax Preparer endorsement now expressly covers the following activities:

1. preparing tax returns;
2. filing tax returns with appropriate taxing authorities;
3. corresponding with taxing authorities concerning clients' tax returns;
4. calculating final or estimated tax payments;
5. monitoring tax refunds; and
6. providing consultation or training in connection with pre-packaged or on-line income tax preparation software.

This represents a marked improvement over the prior language, thanks to a policyholder question asked and answered. So, keep those questions coming.