Accounting firms face unique professional risks that require specialized insurance protection. Below, we've outlined the essential insurance types for accountants businesses, including recommended coverage amounts to keep your practice safe from client disputes, data breaches and operational risks.
What Insurance Do You Need For an Accountant’s Business?
Accounting firms need professional liability, cyber liability, general liability and workers' comp insurance for complete protection.
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Updated: November 12, 2025
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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 Accountant’s Business?
Professional Liability Insurance (Errors & Omissions) 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. Generally, 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. Typically, 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.
Accountant’s Business Insurance Requirements
The table below summarizes the business insurance requirements for accounting firms by state law and client contracts. Requirements vary by state, business structure and client type, with penalties for non-compliance ranging from fines to license suspension and personal liability exposure.
Workers' Compensation Insurance | Required by law in most states once you hire your first employee, with penalties including fines up to $10,000 per employee, criminal charges, business license suspension and personal liability for all injury costs. Accounting firms must carry workers' compensation to protect employees from work-related injuries like repetitive strain injuries, carpal tunnel syndrome and stress-related conditions common during tax season. | Coverage amounts are 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 Insurance (Errors & Omissions) | Required by law for CPAs and accounting practices in Oregon, Kansas and other states that mandate E&O coverage as a licensure condition, with penalties including 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, though 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 Insurance | Required by commercial clients, financial institutions, healthcare organizations and businesses subject to data protection regulations like HIPAA, GLBA and state privacy laws before granting access to sensitive financial data. Client contracts mandate cyber insurance due to the confidential tax returns, Social Security numbers and banking information accountants handle. | Client contracts require $1 million to $2 million in cyber liability coverage, with healthcare clients and large corporations often requiring $3 million to $5 million. Coverage must include breach notification, credit monitoring, regulatory defense and business interruption from cyber events. |
General Liability Insurance | Required by commercial clients, building landlords for office leases, municipalities for business licensing and professional liability insurers as a prerequisite for E&O coverage. Property managers, corporate clients and co-working spaces require proof of general liability before allowing accountants to work on their premises or access client facilities. | The industry standard requirement is $1 million per occurrence and $2 million aggregate, though high-value commercial clients and premium office buildings may require $2 million to $3 million. |
Commercial Auto Insurance | Required by law in 49 states for all 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. |
Required by landlords for businesses leasing commercial office space and by lenders 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. | Coverage amounts are 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. | |
Required by high-value clients including Fortune 500 companies, large municipalities, healthcare systems and financial institutions 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), while enterprise clients and government contractors may require $5 million to $10 million in combined limits. | |
Fidelity Bond (Employee Dishonesty Coverage) | Required by commercial clients, financial institutions and organizations whose accountants handle cash, process payroll or have access to client bank accounts and financial assets. 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, with financial institutions and high-net-worth clients often requiring $500,000 to $1 million based on the value of assets the accounting firm can access. |
How To Ensure Accountant’s Business Insurance Requirements Are Met
This section provides a step-by-step guide for proving and maintaining your accounting firm's insurance compliance after purchasing coverage. Following these steps ensures you meet legal requirements, satisfy client contract obligations and maintain proper licensing.
- 1Request Certificates of Insurance (COI) from Your Insurance Provider
After purchasing professional liability, cyber liability and other required policies, request Certificates of Insurance from each insurer before tax season client onboarding or audit engagements begin. Most insurers deliver COIs within minutes via email, 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 to confirm your professional liability shows the required $1 million to $2 million limits and your cyber coverage meets the minimums mandated by healthcare or financial services clients. Accounting businesses serving corporate clients should verify their policies meet higher limits like $3 million to $5 million for professional liability, as Fortune 500 companies and publicly traded firms require enhanced coverage before allowing accountants to perform audits or access sensitive financial systems.
- 3Add clients or landlords as "additional insured" when required
Corporate clients, banks and businesses handling sensitive financial data require being named as additional insured on your general liability policy before granting system access or signing engagement agreements. Contact your insurer to add each additional insured endorsement (typically $25 to $100 per client), or ask about blanket additional insured coverage if your CPA firm regularly onboards new corporate accounts throughout the year.
- 4Submit Certificates of Insurance (COI) 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 proactively update documentation
Schedule calendar alerts 45 to 60 days before each policy renewal (particularly before January for firms with tax season coverage needs) to obtain updated COIs without gaps in protection during your busiest periods. Email refreshed certificates to all active clients, your office landlord, professional liability carriers and state licensing boards immediately upon renewal, as accounting firms lose contracts or face audit engagement delays when clients discover expired insurance documentation during their 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. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like 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!
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