If you are an accountant practicing in Canada, chances are you’re familiar with professional liability insurance. If you are currently practicing, or have in the last six years, then you probably already have it.

If you are not insured, or planning on opening a firm, or simply want to brush up on what professional liability insurance is, here is some useful information to make your insurance journey a little bit easier.

What is Professional Liability Insurance?

Professional liability insurance is a policy designed to protect those who provide services or advice by covering the costs associated with claims alleging negligence or failure to deliver a service as promised. Most professional liability insurance policies cover financial losses suffered by third-parties.


In the province of Ontario, Charter Professional Accountants (CPAs) are required to own a minimum amount of coverage of $1 million (for one accountant practicing), $1.5 million (for two or three accounts practicing) and $2 million (for four or more accountants practicing). This requirement applies whether you’re running a business alone, in a partnership, or through a professional corporation or provide accounting services to the public in Ontario.

There are two types of professional liability insurance policies, ‘occurrence’ and ‘claims-made.’ An occurrence policy covers claims that occurred during the policy period, regardless of when the claim was main. In contrast, a claims-made policy provides coverage for an incident that happened and was filed during the policy period.

For accountants, insurance tends to be claims-made, which is supported by a six-year discovery policy, which covers accountants for six years after they stop practicing.

Why do accountants need professional liability insurance?

No profession is error-proof, and when you provide a service involving other people’s finances, the risk factor multiplies. Here are common claim scenarios accountants may face: 

  • Say you overstated the amount of inventory your client has. As their accountant, you may be held liable for this mistake and be required to reimburse them for the overpayments. Insurance could help cover both legal expenses and reimbursement. 
  • Consider the accountant who made a calculation error on a client’s tax returns causing them to receive less than what they expected – and should have – received. The resulting financial loss is enough for the customer to file a lawsuit against the accountant for negligence. In this case, their insurance could cover both the legal expenses and the amount owed to your client. 

There is a reason professional liability insurance is mandatory for accountants. When you practice accounting, you have a legal responsibility to provide correct services to your client — imposing compulsory insurance on accountants if the CPA associations way of “protecting the public interest” (CPA Ontario). 

“I am a part-time accountant; do I still need professional liability insurance?”
Yes, every person who publically provides accounting services is required to carry professional liability insurance regardless of how often they practice.

“I am about to retire, do I still need professional liability insurance?”
You never know when someone is going to file a claim. If you decide to stop providing accounting services, you are required by CPA to obtain discovery insurance coverage, which offers protection for up to six years after you’ve stopped offering your services. Some insurance providers offer this policy for free, speak with your broker to understand your options.

How much does it cost?

When it comes to insurance, the cost doesn’t compare to the price of the financial repercussions of a negligence lawsuit. Depending on the services you provide, you can expect to spend between $700.00 and $1,075.00 on a professional liability insurance policy with a 1 million dollar limit. For a 2 million dollar limit, the range increases to $1,400.00 to $2,500.00.


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