An accountant neglected to file a required form, and the mistake is not discovered until years later. The client can demand that the accountant pay for the interest and penalties that resulted from the mistake. Professional Liability coverage would cover the interest and penalties less the policy deductible.
During an audit, it is discovered that inventory and assets were overstated from prior years. It is now too late to recover money from the IRS. Understandably, the client demands that his accountant reimburse him for his overpayments. Professional Liability coverage would reimburse the client after the accountant pays the policy deductible.
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