To help your clients understand their obligations and find ways to save money, you spend hours and days reviewing and examining their financial statements and documents within the Canadian tax laws and regulations. It’s a heady responsibility and one that comes with significant peril if you make a mistake. Tax preparer insurance can protect your business from the expense of a third-party lawsuit.
Is Tax Preparer and Bookkeeping Insurance Necessary?
Among the benefits of our tax preparer, bookkeeping, and accounting insurance coverage are:
Preparers of tax returns
- The bookkeeper
- The accounting profession
- Tax preparers need what types of insurance?
The following are common business insurance coverages for bookkeepers, accountants, and tax preparers:
The Business Owner’s Policy (BOP)
- Insurance coverage for cybercrime
- Liability for professionals
- Coverage of valuable papers and records
How does tax preparer insurance work?
An error and omission policy package designed specifically for tax preparers protects them from third-party lawsuits, claims, as well as any financial damages caused by an alleged error they may have committed. You may face costly third-party lawsuits or regulatory discipline if you make a mistake on your client’s tax return and the client loses money, misses a critical deadline, or does not adhere to Canadian tax codes.
Get the tax liability insurance you need to reduce stress and financial uncertainty.
How does it work? (Tax Preparer Insurance)
Based on your needs, a tailored tax preparer insurance policy may include:
E&O Insurance (Errors and Omissions): This insurance, also known as professional liability insurance, protects tax preparers from legal costs and damages resulting from allegations of financial loss as a result of your work, negligence, misconduct, or failure to deliver services.
If a third party sues you for bodily injury or property damage due to negligence or an unexpected accident (for example, a client slipping, falling, and getting injured while visiting your office), the commercial general liability (CGL) insurance provides financial protection. Besides providing coverage for the cost of repairing the property you rent for your business, CGL also protects you from allegations of slander, libel, defamation, and false advertising.
Your cyber liability insurance protects you from lawsuits involving your computers, software, or customer data following a data breach or cybercrime. It includes funds for legal fees, repairs to your computing systems and software, and coverage for losses you sustain after a cyber-attack.
Property insurance covers physical losses to your commercial space and your contents, including computers and furniture, following a natural disaster, severe weather, fire, flood, theft, or vandalism.
What is the cost? (Tax Preparer Insurance)
A tax preparer’s E&O insurance starts at around $400 per year with a $250,000 coverage limit.
You will pay a premium based on a variety of factors, including:
Revenues for the past year and your projections
You provide the following services
Experience in the industry
Your office’s location
What is the number of employees you have
Legal or tax issues in the past
Zensurance licensed brokers can help you determine what types and levels of coverage are best for your business. Most tax preparers carry at least $1 million of liability insurance.
Is insurance required for tax preparers?
All finance and accounting professionals should have E&O insurance policies, including:
- The accounting profession
- The bookkeeper
- CPAs (Chartered Professional Accountants)
- Tax advisors and enrolled agents
- Specialists and preparers of tax returns
Why does a tax preparer need errors and omissions insurance?
You know you asked for all their 1099s and filed them on time, but the client claims you failed to report a 1099.
Whether it was your client’s mistake or your own, you’ll still have to pay for an attorney to defend you.
Your legal defense and any damages you’re liable for can be covered if you have errors and omissions insurance (E&O).
What’s in a name? E&O is also called professional liability insurance.
The real question is: can you afford to be without it?
How much does our tax preparer Insurance and E&O insurance cover?
Your errors and omissions – whether you made them or not
Compensation if you are liable for claims made against you
Defending yourself in court plus hiring a lawyer if necessary
Past work claims filed against you
Coverage worldwide – as long as the claim is filed in the United States, a U.S. territory or Canada
Tax preparers also need other types of insurance, right?
Liability insurance – if you visit clients or they come to your property, you need this coverage. It protects you from claims made against you if someone gets injured or their property is damaged.
In addition to your general liability policy, you can buy business personal property insurance to protect your office equipment (including furniture) against loss or damage, even when you work from home. Your laptop, cell phone and tablet can also be covered when you’re out and about visiting clients.
You should consider getting cyber liability insurance if you keep client data electronically, send emails, or operate a website. It’s not the cyber attack that’ll destroy your business, but the cost of recovering from it.
You can get cyber insurance to cover these expenses, including legal fees, fines, and restoring your systems and data.
Most states require you to have workers’ compensation insurance, even if you only have one employee. But it’s good to have. Because workplace injuries can cripple your business. If you’re sued, workers’ compensation will pay your medical bills, replace your wages and cover your legal fees.
Because every tax preparer insurance needs are different, we can tailor a package to fit your needs. And it’ll only take a few minutes.
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