Insurance for CPAs are policies that protect an accountant from allegations that their service caused harm to a client. CPA insurance isn’t just for liability: it can help your business if any of your property or equipment is damaged or stolen or if your firm suffers a cyberattack. CPA insurance is something that certified public accountants, bookkeepers, and tax preparers should consider purchasing. The most important policy is professional liability, which can cost between $1,000 and $4,000 annually.
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CPA Insurance Costs
The costs you can expect to pay for your premium depend on a number of factors. These costs are for a smaller firm with three or fewer employees and around $250,000 in annual revenue.
Insurance Type | Estimated Annual Premium | Deductible |
|---|---|---|
Professional liability | $1,000 to $4,000 | $0 to $1,000 |
General liability | $300 to $800 | $0 |
Business Owner’s Policy (BOP) | $750 to $2,000 | $500 to $1,000 |
Cyber Liability Insurance | $1,900 to $4,600 | $0 to $10,000 |
Workers’ compensation is a required coverage in nearly every state for a business with employees. Workers’ compensation cost is calculated using a formula that includes your industry, claims history, the number of employees, and the classifications of the employees.
This means that if your firm has a secretary and an insurance agent and offers financial services, each job has a different classification and impacts workers’ compensation differently. The price of workers’ comp can vary significantly even for the same type of business.
Some important factors that providers consider when determining the cost of CPA insurance include the following:
- Services: CPAs often pay more for professional liability than bookkeepers because their clients have higher expectations and the industry has strict professional standards.
- The number of employees: Not only might you need workers’ compensation, but having more employees increases the likelihood of something going wrong, so insurers may charge more for general liability, professional liability, and cyber liability.
- Claims history: Generally, insurers look at three years’ worth of information and set higher premiums if they see either multiple or particularly severe claims.
- Risk management: How you handle contracts, cybersecurity, and personal identifying information will impact how the provider views the risk associated with your business.
How to Save Money on CPA Insurance
While CPAs can expect to pay more, there are still some ways to save money.
- Focus on compliance and safety: Since claims history is an important part of the premium, do what you can to ensure contracts are honored, and the work is error-free. Make sure to use engagement letters with all of your clients.
- Join an association: Associations like AICPA offer insurance policies. The rates are typically lower than if you were to go directly through a carrier.
- Shop around: While associations like AICPA are able to offer affordable rates for members, it doesn’t hurt to compare quotes from multiple providers. Sometimes you’ll find a quality policy for a lower price than you are currently paying.
CPA & Accounting Insurance Coverages
Insurance Type | What It Covers |
|---|---|
Professional Liability | Protects business against claims of negligence in its services |
General Liability | Liability coverage for third-party damage, bodily injury, personal injury, and reputational harm |
BOP | Combination of general liability and commercial property and usually includes lost business income |
Cyber Liability | Losses resulting from cyberattacks or data breaches |
Workers’ Compensation | Employees' medical bills and wage replacement for when they suffer worked-related injuries or illness |
This is the most important type of policy for a CPA. Also called errors and omissions (E&O) insurance, professional liability insurance covers legal costs and damages resulting from mistakes in your professional accounting services that caused your client some form of financial harm. This is important coverage for bookkeepers, accountants, and CPAs because even small mistakes in financial recordkeeping can turn into huge lawsuits.
Claims against accounting professionals usually involve negligence or failure to meet professional standards when providing services to their clients. Getting professional liability will cover you, especially when the accusations are baseless.
An example is when you fail to file taxes or file an extension, and the client now has a penalty because of the late filing. Missed deadlines or failure to meet a contractual obligation are examples of scenarios covered by professional liability.
If you’re not sure what to look for when shopping for professional liability insurance, check out our guide on the best providers, where we have taken into consideration all of the important elements of a great insurance company.
Often called “slip and fall” coverage, as its name implies, general liability is a type of insurance that covers lots of different losses. Coverage is divided into three primary categories: property damage, bodily injury, personal injury, and advertising harm that comes from your business operations. If you have clients visit your office, this is important coverage to protect you from the everyday incidents that can and will occur.
For example, after a client meets with you in your office, they go to stand up, but the chair rolls back quicker than they expect, and they fall down and injure their back. This bodily injury claim is something general liability is designed to protect your business from.
A BOP consists of both general liability and commercial property insurance combined into one insurance policy. Most providers will also include lost business income in a BOP. A BOP is a good choice for accounting professionals with firms, as it covers them from the most common risks at a lower premium with the convenience of having one policy for multiple lines of business.
Commercial property covers damages to the policyholder’s property. If you own an office building or rent a space but have office furniture and equipment, commercial property is the coverage you need.
Cyber liability insurance covers losses resulting from cyberattacks and data breaches. Coverage pays for data restoration, extortion, legal fees, and more. Because accounting businesses often store personally identifiable information (PII) digitally on computer databases, most need this increasingly important insurance protection.
According to Hiscox’s Cyber Readiness Report, the cost of a ransomware attack on small businesses in 2023 was $16,000. Of the businesses that paid the ransom, only 50% received their data back, and nearly 1/3 of the businesses experienced another cyberattack.
Like a BOP, cyber insurance offers protection on a first-party and third-party basis. First-party coverage pays for your business losses, such as the cost of communicating with clients or monitoring your credit. Third-party coverage is for losses your business causes others. These might include attorney fees and other legal costs if a client sues because a breach at your firm caused them harm.
For business owners with employees, workers’ compensation insurance is required in every state except for Texas and South Dakota. The cost of coverage depends upon risk exposures, your payroll, and your claims history. Because accountants’ work is low risk compared with other jobs, their workers’ comp premiums tend to be low. Workers’ compensation insurance provides benefits to your employees in the event of work-related injuries or illnesses. Its coverage includes medical bills and wages from lost work time.
For example, an employee develops carpal tunnel syndrome from the repetitive motions of data entry and has to miss work. Workers’ compensation can help the employee by paying them a portion of their income and also covering medical treatment for their injuries.
Who Needs CPA & Accounting Insurance
The term is inclusive of people working in the financial services industry, so any job working in that industry needs to consider CPA insurance. This includes the following:
- CPA firms
- Financial advisors
- Payroll accounting services
- Tax preparers
- Payroll services
- Auditors
- Payroll auditors
- Billing services
- Bookkeepers
If you work with clients and provide any sort of advice that, if something goes wrong, could cause them harm, then you really need to look into purchasing insurance.
Best Accountant Insurance Providers
- The Hartford: Overall best provider
- Simply Business: Best for comparing quotes and saving money
- Next: Best for professional liability for accountants
- Hiscox: Best for tax preparers
- Nationwide: Best for CPA firms that need property insurance
The Hartford: Overall Best Provider for Accountant Insurance
Pros
- Offers every type of policy your firm may need
- 24/7 claims and customer service
- Online account to manage your policy
Cons
- You may not be able to get a quote online
- You will likely have to call to purchase a policy
- You cannot get same-day business insurance
Standout Features
- Professional liability, cyber liability, and a BOP are all offered for accounting firms. The Hartford’s BOP for CPAs also includes $1 million in professional liability insurance.
- The Hartford has several different types of cyber insurance available, including data breach and ransomware insurance.
- Its in-house adjusters have extensive experience in claims because it services over 1 million small business owners.
- You can get an instant certificate of liability from the account dashboard.
Quote: We received a quote for a BOP for $1,498 annually. It contained $5,000 in business property coverage with a $1,000 deductible and general liability with a $2 million aggregate limit.
Financial Stability: AM Best is a credit rating agency for insurance companies, and The Hartford has a rating of A+ (Superior) from AM Best.
Simply Business: Best for Comparing Quotes & Saving Money
Pros
- Available in all 50 states
- Compare quotes online
- Dedicated agents available to help you
Cons
- Customer service is not available at night or on the weekends
- Filing a claim can be confusing, as you will need to call the carrier directly
- Offerings are focused on core coverages
Standout Features
- Online digital broker Simply Business is exclusively focused on helping small and micro businesses find insurance. It is a one-stop shop where you can compare quotes and purchase insurance online without needing to speak with anyone.
- It works with 16 top-rated providers to generate real-time quotes that you can update in real time to make sure the coverage is best for your accounting office.
- Professional liability, general liability, and workers’ comp are all offered online through Simply Business.
Quote: We received two quotes, and both were a combination of general liability and professional liability insurance. The average cost for the two policies was $97.74 monthly.
Financial Stability: Simply Business works with top-rated providers and is owned by Travelers. Travelers has an AM Best rating of A++ (Superior). One of the quotes in this article was from Hiscox, which is rated A (Excellent) by AM Best.
Next: Best for Professional Liability for Accountants
Pros
- Available in all 50 states
- Compare quotes online
- Dedicated agents available to help you
Cons
- Customer service is not available at night or on the weekends
- Filing a claim can be confusing, as you will need to call the carrier directly
- Offerings are focused on core coverages
Standout Features
- Next Insurance has designed a professional liability policy for professionals working in financial services. This includes accountants, actuaries, debt relief services, financial advisers, and loan officers.
- The professional liability policy is a claims-made policy. With Next, you can add prior acts coverage, an optional 36-month extended reporting period, and blanket additional insureds.
- You can manage your policy online or on the app, which is available on both iOS and Android. You can also create and share a COI as often as needed for no extra expense.
Quote: The pricing we found ranged between $18.75 and $96 a month for general liability and professional liability.
Financial Stability: Despite its newness, Next is in a good financial position to handle claims. It has a rating of A- (Excellent) from AM Best.
Hiscox: Best for Tax Preparers
Pros
- Dedicated small business insurer
- Focused on microbusinesses and solopreneurs
- Slowly adding more coverages like workers’ comp
Cons
- If you need to speak with someone, it is only available weekdays, Monday through Friday, from 7 a.m. to 10 p.m. EST
- Complaints for it are higher than the national average
- The quoted limits are sometimes lower than you need
Standout Features
- Hiscox is a great option for those working with global companies or helping prepare off-shore entities because Hiscox insurance has global coverage. Just make sure you file the claim in the US.
- You can get a quote and purchase a policy online without speaking to anyone in just minutes.
- Hiscox offers online account maintenance, where you can request a COI, file a claim, and make changes to your policy.
- It does not have an installment fee, and you can pay for your policy monthly or annually. The only requirement for monthly payment is that you pay for the first two months, and then it is 10 payments.
Quote: Cyber liability costs $385 annually and has a total limit of $250,000 with a deductible of $10,000; the policy covers breach response and lost business revenue from data recovery and the costs of extortion.
Financial Stability: Hiscox is a newer small business insurer, but as a company, its roots go back to 1902. It has a strong financial position with an AM Best rating of A (Excellent).
Nationwide: Best for CPA Firms That Need Property Insurance
Pros
- Established carrier with a strong financial position
- 24/7 claims and customer service
- Lower than average complaints by customers
Cons
- COIs and many policy updates are handled by the local agent, slowing down the process
- The ability to get a quote online is limited
- Usually, you will not be able to buy insurance online
Standout Features
- Nationwide has developed different tailored programs for different lines of business, including those that maintain or own their own office. The program has a high total insurable value of up to $20 million for property and $10 million for a single structure.
- Because of its high limits, it is a great option for financial service businesses that own a building or even own and lease space to other businesses.
- Professional liability, general liability, commercial property, workers’ comp, commercial auto, and surety bonds can all be obtained through Nationwide.
Quote: We received a quote for $675 annually for a BOP that included lost business income, property, and general liability. The property covered $15,000, and the quote included business owners advantage endorsement with an additional $100,000 in property coverage. It also had an aggregate limit of $2 million for general liability.
Financial Stability: Nationwide is one of America’s largest and most established insurers, founded in 1926. It is rated A+ (Superior) by AM Best.
Frequently Asked Questions (FAQs)
Curious about some particular aspect of accountant insurance? I’ve looked through a lot of forums, including Reddit, to find some of the most commonly asked questions by CPAs.
Yes, CPAs should seriously consider cyber liability insurance. Because of the sensitive data handled by CPAs and the increasing frequency of cyberattacks, it makes sense to invest in a cyber liability insurance.
Coverage will come down to the specific language of the policy. However, independent contractors could fall into the category of additional insureds on the policy. Having your own policy, even as an independent contractor, will improve your marketability when looking to work with clients or for firms.
Professional liability is the most important type of liability policy for CPAs. After that, it will depend on the size of your business (workers’ comp) or how it operates (general liability insurance).
Bottom Line
Professionals working in the accounting industry need the right insurance to cover their specific risks—this is a critical part of starting or running a bookkeeping or accounting business. Professional liability is the most important coverage, followed by general liability, a BOP, and workers’ comp. The providers on our list can help you find the best CPA insurance to cover your needs.
The Hartford is a terrific choice for CPA insurance. It offers specialized coverages to provide the best protection for your accounting business needs. Accountants can get a quote online by using The Hartford’s easy-to-navigate website or find a local agent by using the company’s agent search tool.
