Best Insurance for Accountants

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Contributor, Benzinga
February 17, 2022

The integrity and accuracy of your accounting work is crucial. Clients trust you to steer them through tax season and provide the best financial advice. Tax preparation, bookkeeping and work as a Certified Public Accountant (CPA) all bring the potential for errors that can cost your practice thousands. 

Protect yourself and your practice with comprehensive accounting insurance. Start with Benzinga’s guide to understand your accounting insurance options.

Best Accounting Insurance

Accounting insurance is also known as CPA insurance, and it is vital to protect accounting practices and professionals.

With quality business insurance from these top carriers, you can help build and protect a business your clients can rely on.

Types of Accounting Insurance

Owning an accounting business puts you at risk of loss due to property damage or a lawsuit. Even if you’re based in a home office, your employees or clients can get injured. 

Here are the types of insurance you need to protect yourself against these risks and other operational hazards.

Professional Liability Insurance

You carry a lot of responsibility as an accounting professional. You’re managing your clients’ finances while also making recommendations that affect their taxes. But what if you overlook some crucial information? Or make a mistake? A single error could cost you a lot of money, and that’s where professional liability insurance comes in.

Also called errors and omissions insurance, this insurance covers damages and legal costs resulting from mistakes in your professional services. It protects you against claims of negligence, which are common when preparing tax returns and other essential financial documents.

Consider this scenario. You’re preparing tax returns for your client and you incorrectly record income, causing them to owe thrice as much in taxes. Your client later identifies the discrepancy and hires another professional to fix their return. Then he sues your business for the costs. Your professional liability insurance policy may cover the legal fees and other claim costs up to the policy limit.

You can expect your professional liability insurance to also cover omissions or alleged omissions, claims and damages and alleged negligence. Remember, even the most seasoned accounting professionals can make mistakes. That’s why you must protect your business ahead of time.

General Liability Insurance

General liability insurance covers claims of 3rd party property damage, bodily injury and the related legal costs. These claims may arise during your normal business operations or when you’re out of office. Without this coverage, you’d pay for damages out-of-pocket.

General liability insurance covers claims of:

  • Bodily injury or property damage that your business causes to other people.
  • Medical costs if a client or customer hurts themselves while in your business premises.
  • Reputational harm arising from libel, slander, malicious prosecution, wrongful eviction and the violation of another person’s privacy.
  • Advertising injuries like copyright infringement from your business’ ads.

Commercial Property Insurance

Your accounting firm may also need commercial property insurance to protect its physical location. This type of insurance is also essential if you run a home-based accounting business since it offers more coverage than your homeowners insurance policy. Commercial property insurance helps protect your business’s physical assets.

It can pay the repair or replacement costs if some of your business property is destroyed or damaged in a fire, theft or another covered loss. This coverage helps protect your:

  • Building
  • Tools
  • Equipment
  • Furniture
  • Inventory
  • Personal property

Commercial property insurance can also help cover crucial business assets, such as your business income. If you’re unable to open your business due to a covered loss, this policy may help replace your firm’s lost income. You may also customize your commercial property policy to add more protection for items like valuable records and papers.

You can obtain commercial property coverage in the form of a standalone policy or get it as a bundled coverage in a business owner’s policy (BOP). A BOP typically combines 2 or 3 coverages into a single convenient package.

Workers’ Compensation Insurance

As a requirement in most states, workers’ compensation insurance provides benefits to your company’s employees to help them recover from a work-related illness or injury. These benefits may help:

  • Pay for their medical care
  • Replace their lost wages if they can’t get back to work immediately
  • Provide disability benefits
  • Cover the funeral costs if the die

The cost of workers’ compensation coverage will depend on your payroll size, risk of exposure and claims history. Accountants are considered lower-risk, so workers’ comp insurance premiums are lower.

Employment Practices Liability Insurance

The cost of an employment practice-related claim can be high, and you don’t have to be in the wrong to get sued. Employment practices liability insurance protects you and your business from claims and lawsuits by your employees for acts including:

  • Harassment
  • Discrimination
  • Wrongful termination
  • Retaliation
  • Violation of the medical and family leave act
  • Wrongful discipline

Common employee complaints revolve around wages and hourly violations, including job classifications, wage calculation and overtime calculation. Employment practices insurance protects you from such claims by covering the defense costs and any settlements.

Cyber Insurance

Your accounting firm might store customer and employee data like contact information, Social Security numbers and credit and debit card details on computer databases. Cyber insurance insures against losses arising from data breaches and cyberattacks. 

It pays the cost of data restoration, lawsuits, extortion, notifying impacted individuals and managing public relations.

Cyber insurance typically provides protection on a 1st party and 3rd party basis. 1st party coverage will pay for your business losses, including the cost of monitoring your systems or notifying your clients. 

3rd party coverage pays for the losses your business causes to others. These may include the attorney fees and other legal costs if a client sues for harm caused by a data breach at your firm.

Commercial Umbrella Insurance

3rd party liability claims like those covered under your general liability insurance policy could result in a million-dollar lawsuit that goes beyond your policy limit. Commercial umbrella insurance extents liability coverage beyond your policy limits.

For instance, if the settlement costs for a slip and fall claim are $1.5 million and your general liability policy limit is $1 million, you’d have to pay the remaining costs out-of-pocket. 

Your umbrella insurance policy can cover the additional $500,000 settlement costs. An umbrella policy won’t extend coverage on your professional liability insurance cover.

Cost of Accounting Insurance

Several factors contribute to your accounting business insurance costs, including the business size and its risks. Coming up with a cost estimate can be tough, but comparing a few quotes can give you a rough idea of what you should expect to pay. Just provide your business’s ZIP code and get your no-obligation quote.

Other considerations that may affect your business insurance rates include:

  • The size of your business
  • The location of your accounting firm
  • The number of years your firm has been operating
  • The condition of the premises your business operates in
  • The number of personnel your business employs and the payroll size
  • Your business’s claims history

The deductible you choose for business insurance may also make a difference. Each insurance policy you purchase will have various deductible amounts to choose from. Picking a higher deductible will lower your overall insurance premiums.

Your coverage limits will also impact the cost of insurance. Insurance policies have different coverage limits, which is the maximum amount your insurance carrier will cover in the event of a claim. Lowering your coverage limits will help reduce the cost of your insurance premiums. 

Speak with an insurance agent or representative to understand the right coverage limits for your policies.

As you shop around for the best insurance rates, be on the lookout for ways to save on business insurance. You can save on insurance by bundling coverage through a BOP that combines commercial property and general liability policies. You may also inquire about insurance discounts.

Insureon is a popular carrier, and it has published the median annual costs for various business insurance policies as follows:

  • $350 per year for general liability insurance
  • $500 per year for a BOP
  • $400 per year for professional liability insurance

How Accounting Insurance Works

Accounting insurance works like any other type of business insurance. It generally refers to a set of policies that tax preparers, bookkeepers and accounting professionals need. You must review each type of insurance to determine the most suitable coverage for your business. 

Professional liability insurance is an essential coverage for accountants since it insures against claims of negligence in their practice. Accounting firms may also consider workers’ compensation insurance to cover employee claims of workplace-related illnesses and injury and commercial property to protect business assets. 

You can work with a carrier that specializes in accounting insurance or 1 that offers various business insurance options. Think of accounting insurance as an investment in your firm.

Get Coverage for Your Accounting Firm

Getting coverage for your accounting firm starts with obtaining a quote. It’s easy to get quotes from our recommended insurance companies. Just provide your business’s ZIP code and receive a price estimate. You’ll also want to compare coverage limits, policy features and the insurer’s reputation.

Protect yourself and your employees today with the right insurance for your accounting firm.