Mike McLean February 12, 2024 8 min read

CPA Insurance Cost: How Much Should Accountants Pay?

A person is giving a thumbs up after finding out what to expect with CPA insurance costs.

As an accounting professional, having insurance is essential to the success of your business, but you may be wondering what to expect when it comes to CPA insurance costs.

Or, maybe more importantly, what is the cost of not having it?

After all, the accounting profession is complex, with numerous laws and regulations that accountants must keep up with while continuing to serve their clients.

While the profession’s demands mean accountants and other financial professionals are typically detail-oriented, that doesn’t mean they won’t ever make a mistake. And when those mistakes happen, they can lead to legal action and financial devastation.

That’s why accountants need to have the right accounting insurance to protect them from costly financial repercussions and provide their clients peace of mind in the event something happens.

Below, we’ll cover what accountants and other financial professionals need to know about the cost of accountant insurance, including average rates, factors that can impact the cost of accounting insurance, and tips on how to keep CPA insurance costs down.


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Who Needs Accounting Insurance?

For accountants, even a small mistake can be costly. In a recent survey we conducted of more than 200 accountants, 46% reported that they’ve experienced a situation where an error or mistake in their work resulted in financial losses or penalties for their company/client. And 72% of respondents who experienced a mistake said either they or their company were held financially responsible.

This is a graph about the most common lawsuits financial pros face

That’s why anyone providing professional financial services including CPAs, tax preparers, and bookkeepers needs to purchase accounting insurance. Regardless of the professional financial services you provide, you’re likely to face a claim (or two or three) at some point in your career. Even if you’re an accountant working part-time from home, there is still the risk that a disgruntled client could take legal action if they’re unhappy with your work.

Common Types of Insurance Claims for Accountants

What types of claims can accountants encounter? Here’s a look at a few examples.

Scenario 1

A local business comes to you for help with filing taxes. The business owners send over the necessary information, and you finish the company’s taxes well before the filing deadline. However, it’s later revealed that you made an unintentional error, and the IRS ends up conducting an audit of the local business. As a result of your mistake, the client sues you for negligence.

Even the most seasoned accountants can make mistakes. With accountants professional liability insurance, your defense costs and any settlements regarding claims of negligence, errors, omissions, or breach of contract are covered, so you don’t have to pay out-of-pocket. 

Scenario 2

A client comes to your office one day for a meeting. Everything goes smoothly until the client slips and falls on a wet floor that didn’t have signage. The client injures their ankle and decides to take you to court to recoup damages. 

Fortunately, with general liability insurance, your accounting firm is covered for any legal costs and settlements regarding bodily injury or property damage claims.

Scenario 3

Despite taking measures to secure your network, it gets hacked by cybercriminals, making your files inaccessible and stealing confidential information about your clients.

Considering that 60% of accountants do most or all of their work digitally, it’s no surprise that hackers frequently target accounting firms. Having cyber liability insurance means you won’t be on the hook for costs associated with a data breach (which add up very quickly). In the event of a cyber incident, your insurance provider will arrange for investigating the breach, notifying affected clients, and credit monitoring for victims, and will cover any legal fees if clients end up suing you. 

Image of a survey taken of over 200 accountant

How Much Does CPA Insurance Cost?

It’s no secret that cost is a top consideration when choosing insurance providers. Below is an overview of the average costs for different insurance products that accountants should consider purchasing. 

Keep in mind, however, accountant insurance costs depend on various factors, and your accounting business could pay less or more than what’s highlighted below.

Professional Liability Insurance

If you could only pick one insurance policy to purchase for your accounting business, it should be this one. Also known as errors and omissions (E&O) insurance, professional liability insurance is a crucial type of coverage that all accountants need to protect against claims alleging errors or negligence.

For a small business with less than $500,000 in revenue and coverage limits of $1M, the average cost of professional liability insurance is around $1,000 per year.

General Liability Insurance/Business Owners Policy

More often than not, general liability insurance which provides coverage for property damage, bodily injury, or personal injury is minimal for accountants since most communication with clients is managed via telephone and email. According to Insurance Business America, the average cost of general liability insurance for small businesses ranges from $40 to $55 monthly ($480 to $660 annually).

Most insurers also offer a business owners policy, or BOP, which combines general liability insurance, commercial property insurance, and business interruption insurance into one convenient and cost-effective package. The cost of a BOP is about $1,000 per year. It’s worth noting that purchasing general liability and property insurance policies separately will likely result in paying around 10% more than with a BOP. 

Cyber Liability Insurance

Given how business is conducted today, cyber liability insurance has become a must-have for nearly all businesses. And accountants are no exception, particularly with the amount of sensitive information they regularly handle. 

According to a study by AdvisorSmith of more than 43 insurance providers, as of 2021, premiums for cyber insurance ranged from $650 to $2,357, with the average annual cost being $1,589 (or $132 per month).

Workers Compensation Insurance

If you have employees, your accounting business must have workers compensation insurance. While workers compensation is subject to state law and covers employee injuries/disease occurring the course or scope of employment, it is highly recommended for any business that employs staff. There’s a specific formula for calculating workers compensation insurance rates:

Premiums = (Payroll/$100) x Class Code Rate x Experience Rate Modification

For more detailed information, check out our guide on calculating the cost of workers comp insurance.

Employment Practices Liability Insurance (EPLI)

Though you won’t need this coverage when starting your accounting business if you don’t have any employees, it’s worth keeping in mind as your firm grows. EPL insurance will cover your firm for employee-related claims such as discrimination, harassment, and wrongful termination. 

The average cost of EPLI coverage for small businesses was $1,824 per year as of 2022, according to AdvisorSmith.

What Affects CPA Insurance Cost?

Because every business is different, there is no one-size-fits-all answer for how much insurance will cost your accounting business. As mentioned earlier, several factors impact how much accountants will pay for insurance. Here’s a look at some of the critical factors that can affect the cost of insurance for accountants:


Accounting firms (and really businesses of any type) located in large cities, like New York City, Chicago, or San Francisco, will pay higher insurance premiums than those in less populated areas.

Size of Your Business

The size of your business goes hand in hand with accountant insurance costs. Because the more employees you have, for instance, the more you’ll need to spend to insure them all.


Revenue is a crucial factor when calculating the cost of insurance because the more income your business brings in, the more potential risks it faces.

Areas of Specialization

The types of services you provide clients play a role when calculating insurance premiums. For example, CPAs can expect to pay more for insurance than bookkeepers.

An insurance provider may also ask about the types of clients you work with (or plan to work with). Suppose your firm handles audits and tax preparations for large companies. In that case, your premiums will be higher than those for an accountant who works exclusively with private citizens.

Past Claims

Unsurprisingly, your claims history is an essential factor for CPA insurance costs. A company with a long history of costly claims will pay more for insurance than a business that has never had a claim. 

Insurance Limits

In a nutshell: The higher your coverage limits, the more you’ll pay. Be sure to carefully discuss insurance needs and limits with any insurance provider to ensure you have adequate protection without overpaying.

How Can Accountants Keep the Cost of Insurance Down?

Insurance is crucial to the success of any business. In fact, if you opt to do business without it, you’ll likely struggle to find new clients and grow your business. 

While it’s essential to have insurance, there are ways to help lower CPA insurance costs without jeopardizing protection.

Purchase Insurance Programs

Remember the BOP mentioned earlier? That’s a prime example of an insurance package that provides essential coverage at a more reasonable price than buying the included policies separately. Be sure to ask your insurance provider about other packages or programs that could benefit your accounting business. However, insurance programs are important to consider, regardless of accountant insurance cost. 

Pay in Advance

If you have the funds available, paying your insurance premiums in advance can bring significant savings. Most insurers offer discounts if you pay your annual CPA insurance costs upfront rather than month-to-month.

Invest in Risk Management

Investing in risk management practices is hands down one of the best ways to reduce insurance premiums. Insurance is all about protecting your business from risks. So, the more risks your business faces, the more you will pay for coverage. If you need help figuring out where to start with risk management for your accounting firm, ask your insurance provider about areas to focus on.

Only Buy What You Need

Many insurance options are available, but take the time to consider what your accounting firm actually needs. Having unnecessary coverage that doesn’t benefit your business just means unnecessary spending. 

Raise Your Deductibles

Raising your deductible can lower your upfront CPA insurance costs. But, increasing your deductible comes with the trade-off of having higher expenses to cover if a claim is filed. So, it’s a risky move that shouldn’t be your first option for lowering accounting insurance costs. If you choose to pay a higher deductible, make sure you don’t select a deductible you won’t be able to pay if something happens. 

Review Your Policies Annually

Truthfully, reviewing your coverage every year is something everyone should make a point of doing. As your business changes, your insurance needs will change along with it. Keeping your insurance provider informed about those changes can go a long way in helping you save on CPA insurance costs.

While it’s understandable that cost will be a consideration for any accountant looking to purchase insurance, remember that the cost of not having insurance will be substantially higher. And while cost is an important factor, it shouldn’t be the only consideration take the time to get to know any insurance provider, including their terms and conditions, along with what’s covered by their policies.

Interested in learning more about accounting insurance, accountant insurance costs, or policies for other financial services professionals? Get quoted for foundational, industry-tailored coverage in minutes with Embroker.


Insurance for Financial Services Professionals

Tailored coverage for accountants, bookkeepers, and tax preparers. Full coverage packages with one simple application.

Learn More

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