Contributor, Benzinga
October 27, 2020

Being a certified public accountant (CPA) comes with a lot of responsibility. You help clients manage and protect their finances, but you also need to protect yourself and your practice. Learn about the CPA insurance you need to protect your practice. 

Best CPA Insurance

To find the best CPA insurance, get quotes from multiple providers. It’s easy to do at Benzinga. Just enter your ZIP code to get a quote. Here are Benzinga’s picks for the best business insurance providers for CPAs. 

How CPA Insurance Works

CPA insurance is an umbrella term for the multiple types of insurance a CPA could need. CPAs typically have multiple insurance policies to protect different aspects of their business. At a minimum, CPAs have general liability, commercial property and professional liability insurance. They might have other policies as well depending on whether they drive for work-related purposes, whether they have employees and other situations. 

Types of CPA Insurance

Here are the most common types of CPA insurance. 

General Liability Insurance

General liability insurance covers 3rd-party claims from injuries or damage to their property. A 3rd-party is anyone other than the business owner or employees. It helps cover medical payments that arise from any injuries, settlements and legal defense fees associated with claims. 

General liability insurance also covers personal and advertising injury. These are claims that come from libel, slander, false advertising and copyright infringement. While you likely wouldn’t do any of these deliberately, something as simple as an employee talking disparagingly about a competitor to another business owner could lead to a lawsuit. General liability also helps cover settlements and defense fees associated with these claims. 

Commercial Property Insurance

Commercial property insurance protects your business property, including its contents. It covers expensive equipment like computers along with any furnishings or personal items. This insurance typically covers losses due to fire, theft, vandalism, storms, building collapses and some types of water damage. 

Floods and earthquakes typically aren’t covered by commercial property insurance properties, so you’ll need to purchase separate coverage for those. 

Business Interruption Insurance

If your property needs to be repaired or your computers are damaged, your business may experience a loss of income. Business interruption insurance helps to make up that lost income. It can also help with mortgage, lease and loan payments, tax payments and covering your payroll. 

With these policies, there’s typically a waiting period of 2 or 3 days before benefits start, and benefits may end after 30 days. You can ask for a longer benefit period, though, if you’re concerned about extended business interruptions. 

Business Owner’s Policy

A business owners policy (BOP) combines 3 of the most important types of coverage for CPAs: general liability, commercial property and business interruption insurance. Buying a BOP makes getting essential coverage simple, and it’s a good fit for small- and medium-sized businesses. A large CPA practice or one with unusual risks may want to purchase the policies separately to better tailor coverage to its needs. 

Professional Liability Insurance

Professional liability insurance is another essential type of insurance for CPAs. General liability insurance covers non-professional acts of negligence. Professional liability insurance helps cover any claims that could arise from your professional advice, including the costs of a legal defense. This insurance is also called errors and omissions (E&O) insurance. 

Commercial Auto Insurance

If you meet with clients in their homes or drive for other business purposes, commercial auto insurance can keep you and your employees protected. It’s similar to personal auto insurance, but it tends to have higher policy limits. 

At a minimum, your policy should meet the state-required coverage. This includes liability, which covers property damage and injuries if you or an employee is found to be at fault in an accident. You may also be required to purchase uninsured/underinsured motorist coverage, which pays claims if there’s an accident involving a hit-and-run driver or one with little to no auto insurance. Your state may also require medical payment coverage, which pays for the medical costs of you or your passengers in an at-fault accident. 

Comprehensive and collision coverage are also worth considering. Comprehensive covers damage from incidents that aren’t related to an accident, including fire, theft, vandalism, storms, flooding and falling objects. Collision covers the damage to your vehicle if you or your employee is in an at-fault accident. 

Commercial Umbrella Insurance

This type of insurance covers you after other policies have met their limits. While commercial policies often have high limits, all it takes is 1 or 2 claims to exhaust your coverage. Once you’ve met your policy limits, you’re responsible for any costs. 

Umbrella insurance policies start coverage after your policy limits are met. They may also include additional coverage that isn’t found in the underlying policies. To purchase umbrella insurance, your underlying policies may have to meet minimum coverage requirements. For example, your general liability policy may need to have a $1 million limit. 

Cybersecurity/Data Breach Insurance

CPAs handle sensitive customer data, making them an appealing target for cybercriminals. Cybersecurity insurance helps your business recover if it experiences a data breach or another type of cyberattack. Other potential threats include malware, which can spread viruses through your computer system, and ransomware, which could hold your computer system (and all your client data) hostage until you pay a ransom. 

Cybersecurity insurance helps you restore your computer systems. It also helps you pay for identity theft protection for your clients if their information has been compromised. 

Workers’ Compensation Insurance

If you have employees, you’re required to purchase workers’ compensation insurance in most states. It helps protect your employees by paying for their medical care if they experience a work-related injury, like carpal tunnel, or illness. It also provides a benefit for lost wages. 

Workers’ compensation insurance also protects your firm. In most cases, employees can’t sue you over work-related injuries if you have workers’ compensation insurance. States that require workers’ compensation insurance also penalize you if you don’t have coverage in place. 

Employment Practices Liability Insurance

Employment practices liability insurance protects you if employees sue your firm over their employment. They might sue for wrongful termination, failure to promote, discrimination, wrongful infliction of emotional distress and more. This coverage helps to cover the cost of any damages awarded and your legal defense. Some insurance providers offer this as standalone coverage, while others add it as an endorsement to a BOP. 

Cost of CPA Insurance

The cost of CPA insurance is influenced by:

  • The assets your business owns
  • Your business property
  • Your firm’s location(s)
  • The number of employees
  • The size of your payroll

Here are the averages for several types of insurance. 

PolicyAnnual PremiumCoverage Limit
General Liability Insurance$350$2 million
Commercial Property Insurance$755$60,000
Business Income Insurance$500-$1,500Based on business income
Business Owners Policy$800-$2,000$1 million per occurrence/$2 million per policy term
Workers’ Compensation$560n/a
Commercial Auto Insurance$1,700$1 million
Commercial Umbrella$500-$1,500$1 million
Cybersecurity/Data Breach$1,500$1 million
Employment Practices Liability Insurance$800-$2,000+ $500,000 per occurrence/$1 million per policy term

Which CPA Insurance Is Right for You?

Every CPA firm is different. Which insurance is right for you, and exactly how to configure those policies, depends on your firm and its needs. The best approach is to get quotes from multiple providers, which is easy on Benzinga. You just enter your ZIP code and you’re connected with top providers. 

As you review quotes, look at the premium, the policy limits and the deductibles. You can lower your premium costs by increasing your policy limits or raising your deductible. Raising your deductible could put you in a tough spot if you don’t have the cash on hand to cover costs before your coverage starts. 

Consider taking a balanced approach. How much could your firm afford to pay out of pocket for a claim? Even if it means paying a higher premium, it could be worthwhile to have a lower deductible and higher limits. It’s all an investment in protecting the business you’ve worked so hard to build. 

Try Simply Business

Simply Business offers a comprehensive suite of business insurance that specializes in making it easy to insure your business. Whether you’re looking for construction workers' insurance or insurance for your startup, Simply Business helps you find the right workers’ comp coverage at the right price. This includes CPAs, tax service offices and business service or financial services companies.

Tell Simply Business a little bit about your business and you'll get almost-instantaneous affordable quotes from top insurance providers to protect your business and safeguard employees if they’re hurt on the job. You can also look into business owner’s plans, liability insurance, commercial auto and more that will cover everyone on your team, and you can get covered in accordance with state law without overspending. 

Building your business is hard enough. Let Simply Business make it easier. Get a quote from Simply Business today.