Most accounting firms need five types of insurance coverage:
What Insurance Do You Need for an Accounting Business?
The types of insurance an accounting business needs most include general liability, workers' comp, professional liability and commercial auto insurance.
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Updated: February 3, 2026
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Accountants’ Business Insurance Requirements: Key Takeaways
Professional liability insurance is the most critical coverage for accounting firms due to high risk of claims from tax errors and faulty advice (read more).
Accountants' business insurance requirements commonly mandate professional liability, workers' compensation, cyber liability and general liability (read more).
Optional coverage you should consider includes commercial property, employment practices liability and commercial umbrella insurance.
To meet accountants' insurance requirements, get a COI from your insurer, verify coverage meets requirements, submit proof and maintain your policy (read more).
What Insurance Types Are Needed for an Accounting Business?
Professional liability insurance for accountants
This coverage handles legal defense costs and settlements when clients claim financial losses from tax preparation errors, missed deductions, incorrect financial statements or faulty advice. Most accounting practices need $1 million to $2 million per claim with a $2 million to $3 million aggregate limit, though firms handling audits or serving high-net-worth clients should consider $5 million or higher.
Real-life coverage scenario: An accountant miscalculated quarterly tax payments, resulting in $45,000 in IRS penalties and interest charges. The client sued for the penalties plus $78,000 in legal fees. Professional liability insurance covered the $123,000 settlement plus $34,000 in defense costs, saving the accounting practice $157,000.
Cyber liability insurance for accountants
Accounting firms store Social Security numbers, bank account details, tax returns and confidential financial records, making them prime targets for cybercriminals. This coverage pays for breach notification, credit monitoring services, forensic investigation, ransom payments, regulatory fines and lawsuits from affected clients. You should carry $1 million to $3 million in cyber liability coverage, with larger firms handling hundreds of clients needing $5 million or more.
Real-life coverage scenario: Hackers accessed an accounting firm's server through a phishing email, stealing tax returns and banking information for 240 clients. The breach cost $67,000 for forensic investigation, $43,000 for legal counsel, $89,000 for client notification and credit monitoring, $125,000 in regulatory fines and $156,000 to defend against client lawsuits. Cyber liability insurance covered all $480,000 in expenses, plus the firm received expert crisis management support.
General liability insurance for accountants
General liability policies cover third-party claims for bodily injury and property damage occurring at your office or during client meetings. Coverage protects your practice from slip-and-fall injuries, accidental damage to client property or injuries during business operations. You need $1 million per occurrence with $2 million aggregate coverage.
Real-life coverage scenario: During a client consultation, an accountant knocked over a laptop while reviewing documents, destroying the computer and an external hard drive containing critical business files. The damaged equipment cost $2,800 to replace, data recovery services totaled $6,200 and the client claimed $8,500 in lost productivity. General liability insurance covered the entire $17,500 claim plus $4,300 in legal fees.
Workers' compensation insurance for accountants
Required by law in most states when you hire your first employee, workers' compensation insurance pays medical costs and lost wages for work-related injuries and illnesses. Accounting professionals face risks from repetitive strain injuries, carpal tunnel syndrome, back problems from prolonged sitting and stress-related conditions during tax season. Coverage amounts are set by your state, with premiums based on your payroll and employee classification codes.
Real-life coverage scenario: A staff accountant developed severe carpal tunnel syndrome during tax season, requiring surgery on both wrists. The condition prevented her from working for four months. Medical expenses totaled $28,000 for surgery, physical therapy and follow-up care, while lost wages reached $22,000. Workers' compensation covered all $50,000 in costs and protected the firm from a potential lawsuit.
Commercial auto insurance for accountants
Commercial auto insurance provides liability and physical damage coverage for vehicles used for business purposes, including driving to client meetings, bank visits or picking up documents. If you or your employees use vehicles for work beyond commuting, you need commercial auto coverage since personal policies exclude business use. Most accounting practices need $1 million combined single limit for liability plus comprehensive and collision coverage with a $500 to $1,000 deductible (the amount you pay out-of-pocket before insurance coverage begins).
Real-Life Coverage Scenario: A CPA ran a red light while rushing to a client meeting, causing an accident that injured two people in the other vehicle. Medical bills totaled $89,000, vehicle damage reached $34,000 for both cars and the injured parties claimed $47,000 in lost wages. Commercial auto insurance covered all $170,000 in damages plus $23,000 in legal defense costs.
Accountants’ Business Insurance Requirements
State laws and client contracts determine which insurance types you must carry and coverage amounts.
Workers' compensation | Most states require workers' compensation once you hire your first employee. Penalties for noncompliance include fines up to $10,000 per employee, criminal charges, business license suspension and personal liability for all injury costs. Accounting firms need workers' compensation to protect employees from work-related injuries like repetitive strain injuries, carpal tunnel syndrome and stress-related conditions common during tax season. | Set by your state based on payroll and employee classification codes. Most states require coverage for all employees regardless of hours worked or employment status. |
Professional liability (errors & omissions) | Oregon, Kansas and other states require E&O coverage for CPAs and accounting practices as a licensure condition. Penalties include license suspension, fines and inability to practice. Most commercial clients, corporate accounts and government contracts also require professional liability coverage before allowing accountants to access financial records or provide tax and audit services. | State-mandated minimums range from $100,000 to $250,000 per claim. The industry standard for client contracts is $1 million to $2 million per claim with $2 million to $3 million aggregate. Corporate clients and audit engagements commonly require $3 million to $5 million. |
Cyber liability | Commercial clients, financial institutions, health care organizations and businesses subject to data protection regulations like HIPAA, GLBA and state privacy laws require cyber insurance before granting access to sensitive financial data. Client contracts mandate this coverage because accountants handle confidential tax returns, Social Security numbers and banking information. | Client contracts require $1 million to $2 million in cyber liability coverage. Health care clients and large corporations often require $3 million to $5 million. Coverage must include breach notification, credit monitoring, regulatory defense and business interruption from cyber events. |
General liability | Commercial clients, building landlords, municipalities and professional liability insurers require general liability coverage. Property managers, corporate clients and co-working spaces require proof before allowing accountants to work on their premises or access client facilities. | The industry standard is $1 million per occurrence and $2 million aggregate. High-value commercial clients and premium office buildings may require $2 million to $3 million. |
Commercial auto | All 49 states with vehicle insurance laws require commercial auto coverage for business-owned vehicles. Personal auto policies don't satisfy state requirements when vehicles are used for business purposes like client meetings, bank visits or document delivery. Accounting firms using vehicles for work beyond commuting must carry commercial auto coverage or risk license suspension, vehicle impoundment and personal liability for accidents. | State minimums vary, with standard requirements ranging from 25/50/10 to 50/100/50 split auto liability limits. Accounting businesses should carry $1 million combined single limit for adequate protection during client-related travel. |
Landlords require commercial property insurance for businesses leasing commercial office space. Lenders require it for firms with financed properties to protect their investment and ensure business continuity. Lease agreements specify minimum coverage amounts and require naming the landlord as loss payee or additional insured. | Based on the replacement cost of building improvements, office equipment, furniture and technology infrastructure, ranging from $50,000 to $500,000, depending on office size and equipment value. | |
High-value clients, including Fortune 500 companies, large municipalities, health care systems and financial institutions, require umbrella coverage before engaging accounting services. These clients mandate umbrella coverage as excess liability protection beyond primary general liability and professional liability limits. | High-value clients require $3 million to $5 million in total liability coverage (primary plus umbrella). Enterprise clients and government contractors may require $5 million to $10 million in combined limits. | |
Fidelity bond (employee dishonesty coverage) | Commercial clients, financial institutions and organizations whose accountants handle cash, process payroll or access client bank accounts require fidelity bonds. CPA firms obtain fidelity bonds to protect against employee theft of client funds, fraudulent wire transfers or embezzlement by staff accountants. | Client contracts require $100,000 to $500,000 in fidelity bond coverage. Financial institutions and high-net-worth clients often require $500,000 to $1 million based on the value of assets the accounting firm can access. |
How to Meet Accountants' Business Insurance Requirements
Follow these five steps to meet accountant's business insurance requirements and maintain coverage:
- 1Request Certificates of Insurance (COI) from your insurance provider
After purchasing cleaning insurance policies, immediately request a Certificate of Insurance from each insurer. Most providers offer instant download or email delivery within minutes to hours, which accounting firms need before accessing client QuickBooks files, processing payroll or handling confidential financial data.
- 2Verify coverage amounts match client and regulatory requirements
Compare each COI against your client engagement letters, state CPA licensing requirements and office lease agreements. Your professional liability must show $1 million to $2 million limits, and your cyber coverage must meet health care or financial services client minimums. Corporate clients need higher limits. Verify your policies meet $3 million to $5 million for professional liability. Fortune 500 companies and publicly traded firms won't let you perform audits or access financial systems without enhanced coverage.
- 3Add clients or landlords as "Additional Insured" when required
Corporate clients, banks and businesses handling sensitive financial data require additional insured status on your general liability policy before granting system access or signing engagement agreements. Contact your insurer to add each endorsement ($25 to $100 per client), or ask about blanket additional insured coverage if you regularly onboard new corporate accounts.
- 4Submit COIs to all required parties
Send your COIs to corporate clients before accessing their accounting software, to your office landlord before lease signing, to state CPA boards during license renewal and to municipalities requiring proof for business operating permits. Create a COI tracking spreadsheet noting which clients received certificates, expiration dates and renewal deadlines, since tax preparation clients and audit engagements require annual certificate updates even for multi-year service agreements.
- 5Set up renewal reminders and update documentation
Set calendar alerts 45 to 60 days before each policy renewal, especially before January for tax season coverage. Email updated certificates to all active clients, your office landlord, professional liability carriers and state licensing boards immediately after renewal. Expired insurance documentation causes lost contracts and audit delays when clients run vendor compliance reviews.
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About Mark Fitzpatrick
Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. He has analyzed the insurance market for over five years, conducting original research for insurance shoppers. His insights have been featured in CNBC, NBC News and Mashable.
Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!
He writes about economics and insurance, breaking down complex topics so people know what they're buying.