If you are an accountant, you are most likely familiar with professional liability insurance. You know it is a requirement to practice, and you, being the responsible accountant that you are, are already covered, and so are the employees of your firm.

So, if that is all that is required, then it is all you need to cover your business, right? Not quite. While professional liability insurance is required, business insurance is not.

Here’s the thing about insurance; it is not one size fits all, and there are many different types of coverage. Not only are you providing a service, but you are also running a business, which requires added layers of protection.

When it comes to protecting your business, knowing what type of business insurance you need is just as important as knowing what you do not need.


What is Business Insurance?

Business insurance is a policy package that is designed to protect business owners from financial loss that may pose a threat to your business.

  • Professional Liability Insurance: You’re already familiar with this policy, so we’ll keep it brief. Professional liability insurance protects accountants against claims alleging negligence or failure to deliver a service as promised, which results in a financial loss for a third party.
    Consider Luanne, who made a $1.5 million error in a client’s financial statements, which resulted in them successfully suing her for negligence. In this case, Luanne’s professional liability insurance could cover the legal expenses associated with the lawsuit, in addition to the $140,000 their client spent on having another firm correct her mistake, totaling $170,000.
  • Commercial General Liability Insurance: When most people think of business insurance, they are thinking of commercial general liability insurance (CGL). CGL is a basic insurance policy that provides coverage for the legal expenses associated with third-party liability claims frequently brought against business owners, such as property damage or slip-and-fall injury.
    Say, for example, your client visits your office to sign some documents. On their way out, they slip on the stairs and injure their wrist. Your client successfully sues you, alleging they slipped on water on the stairs. Your policy covers both the medical and legal expenses, totaling $15,000.
  • Business Interruption Insurance: Also known as business income insurance, business interruption insurance covers the loss of income during the time it takes for a business to recover following a disaster. If you need to temporarily close your business, this type of insurance will provide coverage for (1) the profits you would have earned, (2) normal overhead expenses, like rent or electricity, (3) employee’s wages, and (4) the cost of moving to a temporary location.
    Take, for example, a small fire forces you to temporarily suspend operations and it takes three months to resume. During that time, you incurred $10,000 of continuing expenses and it is estimated that your small firm would have earned an operating income of $40,000. The total business interruption loss covered would be $50,000.’
  • Commercial Property Insurance: In addition to your firm’s physical property, commercial property insurance also provides coverage for loss or damage to many of the other physical assets, like furniture and technology. It also provides coverage for repair and replacement costs. In Canada, freezing temperatures are the norm.
    Say during an unusually cold evening, the pipes in your office freeze and burst, flooding your office and causing significant water damage. Luckily, you have commercial property insurance, which covers the cost of replacing the floors in your office and repairing the pipes, plus the cost of renting a temporary office space, totaling $25,000.
  • Cyber Liability Insurance: Here’s some unfortunate news, cyber hackers love to target small businesses. Last year, 43% of small businesses experienced a data breach. Cyber liability insurance provides coverage for financial loss due to cybercrime. Chances are you have your client’s financial information stored electronically, putting them and your business at risk.
    For example, a hacker pretends to be a client and tricks one of your employees into clicking on a malicious link that gives them access to your client’s personal information, including financial data. Your cyber liability insurance covers the cost to notify your clients and provide credit monitoring, as well as legal expenses from two lawsuits, totaling $500,000.

While these are common policies suggested for accountants, this is not a comprehensive list. Your business is unique and based on the type of services you provide, and where you operate your business from, you may require more or less coverage. Speak with your broker about customizing your policy to suit your specific business needs.

How much is business insurance for accountants?

Much like your practice, business insurance policies for accountants are unique, and the cost depends on several factors, such as the services you offer, the size of your firm, and annual revenue. As a small business owner, you can expect to pay $450 a year for a general liability policy with a 2 million dollar limit.

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