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Accountants Professional Liability Insurance

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Why do CPAs need Professional Liability Insurance?

Professional liability insurance—also known as errors and omissions insurance (E&O) and accountant indemnity insurance—is a necessity for a CPA (certified public accountant). Accountants have to stay on top of constantly changing laws and regulations to best serve their clients. No matter how careful and meticulous you are in your job, you’re only human—and prone to making mistakes. But as a CPA or other financial professional, those mistakes can be costly. You have to protect yourself from risk. 

Who Needs Professional Liability Insurance?

What businesses should consider accountant liability insurance? We recommend it for these professions:

  • Accountants
  • Auditors
  • Bookkeepers
  • Billing services
  • Consulting services
  • CPA firms
  • Tax preparers
  • Financial advisors
  • Payroll companies
  • Small and mid-sized accounting firms

Anyone who has a fiduciary responsibility to their clients may want to consider accountants' professional liability insurance.

What does Professional Liability Insurance Cover?

Professional liability insurance coverage protects accountants if they make errors or mistakes while doing their job. This insurance provides protection if no mistake was made. It can cover: 

  • Claims from past services
  • Claims of undelivered services
  • Alleged errors
  • Professional negligence
  • Breach of professional duty
  • Misleading or misinterpreted statements
  • Performance-related claims

Why You Need Accountants Professional Liability Insurance Coverage

As a bookkeeper, accountant, or financial advisor, you may not be aware of all of the risks you face running your business. Here are some reasons why you should consider accountant liability insurance.

Example #1: One of your clients has their business's tax return audited. The IRS found a mistake that you made and now your customer owes thousands of dollars in back taxes. They're upset your firm made an error and sue you. Your professional liability policy helps cover this liability claim.

Example #2: You're a financial advisor and fiduciary and strive to put your clients first. But you are only human, and even with years of experience under your belt, some professional advice you gave a client led to a significant loss for them. They claim you gave them misleading advice and sue you for damages. Your insurance company should step in to provide protection for your business.

Example #3: As an accountant for a large firm, you thought you were immune to frivolous lawsuits. But one of your loyal customers claims you were negligent in your professional duties. Luckily, your firm provided you with accountant liability insurance. Your insurance company will provide you a legal defense to fight the lawsuit.

As an independent accounting professional running your own small business, you can often be overwhelmed with everything you have to juggle. Whether you're a tax preparer handling tax returns for clients, or you're a financial advisor for a leading firm—the accounting industry is cutthroat. You need insurance coverage to protect your business. A great insurance agent can help you assess your insurance needs as a small business owner.

What Other Insurance Coverage Do You Need? 

There are a few policies accountants should consider other than errors and omissions insurance.

General Liability Insurance

General liability insurance protects accountants from being personally responsible for third-party bodily injury or property damage and claims of advertising injury. If you are sued for any of these reasons, your insurance company will provide you a legal defense and help pay settlement costs.

Example: A customer comes into your tax preparation office and trips over some damaged flooring. They’re fine, but their phone is shattered. Once you submit the claim to your insurance company, they will help cover the damage to your potential customer’s phone.

Commercial Property Insurance

Commercial property insurance will include the building your business is located in, whether it’s owned or leased. In addition, furnishing, equipment, computer and phone systems, and anything used to conduct business will be protected. It usually includes coverage for damages from fires, storms, theft, burglary, and vandalism. If you work from a home office, make sure your home insurance company provides coverage for business losses that may occur.

Example: Someone breaks a window to get into your office and steals your computers. Your property insurance policy will help pay to replace the window (some policies will cover the loss of the computers as well).

Business Owners’ Policy

A business owner’s policy (BOP) typically includes basic property insurance and liability protection for your business. It also usually includes business interruption insurance (also referred to as business income), which can help you cover payroll and other operating expenses if you can’t conduct business due to a loss. A BOP is often offered to small businesses at a discounted rate compared to purchasing each coverage separately. 

Example: Your office is damaged by a small fire that broke out. Until your office equipment is replaced, you’re unable to operate as an accountant. While you’re waiting, business interruption insurance coverage can help pay for lost profits and cover employee payroll.

Cyber Liability Insurance

As accounting professionals, you handle very sensitive client information. If you’re the subject of a cyber-attack or data breach, their information can be compromised or stolen. If you have a cyber liability insurance policy, your insurance company can help notify impacted customers, provide them with credit monitoring, and help pay any ransom demands.

Workers' Compensation Insurance

If you hire other accounting professionals and aren’t a solo practitioner, you’re required to carry workers’ compensation insurance in almost every state. Texas is the only state that doesn’t currently require it—but it’s highly recommended. Workers’ compensation helps pay for an employee’s medical bills if they’re injured on the job. It can also help compensate their lost wages for a period of time. 

Example: An accountant at your firm needs carpal tunnel surgery from years of repetitive stress injuries. Because it’s directly related to their job, workers’ comp will help cover the cost of the procedure and their wages until they can return to work. 

How Much Does Professional Liability Insurance for Accountants Cost?

Professional liability insurance costs for an accounting business can be around $45 a month or $500 annually. This would be for a standard policy that covers up to $1 million per occurrence. However, the cost of insurance for accountants can vary significantly depending on these factors:

  • The size of your business
  • The services you provide
  • How many employees you have
  • Whether or not you have office space
  • Annual revenue and payroll
  • The types of insurance coverage you choose
  • The deductibles and policy limits you choose

Other factors may impact your premium. We recommend speaking with your insurance company or an experienced agent to help you determine the risk your business faces and the coverages you need. 

Get Matched with an Insurance Company: Accountants Professional Liability Insurance

Accounting firms aren't immune to risks and you must plan to protect your business. We have a team standing by ready to help you determine the insurance policies you need for your business. Do you just want more information on an insurance company that might be a good fit? Do you want to change coverage? To get a free quote, give us a call at 877-907-5267 or complete the form at the top of the page.

Related Articles: Independent Contractor Insurance, Freelance Liability Insurance


  General Liability:   YES     (Bodily Injury or Property Damage)
  Property Insurance:   YES     (Building and/or Contents)
  Payment Options:   YES     (Pay in Full OR Payment Plans)
  Low Down Payments:   YES     (Flexible Payment Options)


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