Why Do Accountants Need Professional Liability Insurance?

With a commitment to accuracy and a deep understanding of financial systems, today's accountants combine analytical rigour with innovative thinking. They don't just interpret numbers – they craft financial strategies that shape the future of businesses.

Like any professional service provider, accountants face significant financial risks – highlighting the importance of having accountant professional liability insurance.

For example, it's not uncommon for an accountant to be targeted in a third-party lawsuit by either a client due to financial losses or by their clients' partners or financial lenders should their businesses go bankrupt. 

Even a lawsuit without merit can wreak financial and professional havoc on an accountant. Accounting professionals should protect their finances and reputations with professional liability insurance.

What Is Professional Liability Insurance for Accountants?

Professional liability insurance for accountants – also known as errors and omissions (E&O) insurance –  protects accounting professionals against claims or lawsuits alleging financial loss due to a service you provided, negligence, misconduct, or failure to deliver services as promised.

For example, one of our bookkeeping clients erred on a tax return, causing their customer to suffer a loss. Their professional liability insurance covered over $2,000 to reimburse their customer.

In many provinces, carrying professional liability insurance is mandatory for accountants offering public services. For instance, members of the Chartered Professional Accountants of Ontario are required to carry a minimum of $1 million worth of insurance coverage (for one accountant), $1.5 million (for two or three accountants), and $2 million (for four or more accountants). 

This requirement applies whether you're running a business alone, in a partnership, through a professional corporation, or providing accounting services to the public in the province.

Most professional liability insurance policies for accountants are 'claims-made', which provides coverage for an incident filed during the policy period. This is supported by a six-year discovery policy, which covers accountants for six years after they stop practising.

What Other Types of Business Insurance Do Accountants Need?

Accountants need additional business insurance coverage to fully protect their practice and assets, including:

General Liability Insurance: Often called slip-and-fall insurance, general liability insurance provides financial coverage for third-party bodily injury and property damage claims resulting from unexpected accidents caused by your operations or on your business premises.

Claim example: One of our client's customers fell and was injured on our client's business property. Their general liability insurance covered over $2,000 of the injured person's medical expenses.

Commercial Property Insurance: Commercial property insurance is necessary if you own or rent an office space. It includes coverage for your business contents (computing systems, office equipment, furnishings) if damaged by fire, water, natural disasters, theft, or vandalism.

Claim example: A wildfire torched one of our client's business property. Their commercial property insurance and business interruption coverage covered over $150,000 to help them endure and rebuild.

Business Interruption Insurance: Typically included with commercial property insurance, business interruption insurance covers lost income and operational overhead if your business is forced to close temporarily for repairs following an insurable loss, such as a fire.

It's an inexpensive endorsement that can be added to a business property policy, and it's wise to do so.

Claim example: Our client's business property suffered significant water damage after a water pipe burst. They were forced to close for repairs, and their business interruption insurance covered $10,000 in lost revenue while they were closed.

Cyber Liability Insurance: Cyber liability insurance is essential for accountants handling sensitive financial data, offering protection from data breaches and cyber-attacks. It covers legal, crisis management, credit monitoring expenses, and repairs to affected software systems following an attack.

Claim example: One of our clients was the victim of a ransomware attack. Their cyber insurance covered over $200,000 in legal fees and forensic costs.

Avoiding the Pitfalls of Financial Management: Get Accountant Insurance

Accounting is the language of business and is not unlike engineering in that you need a margin of safety.

Protect yourself and your finances from lawsuits and costly mistakes and give your clients confidence by getting an accountant insurance policy.

Fill out an application for a free insurance quote in less than five minutes.

Let our licensed brokers shop our partner network of over 50 insurers to get you the customized policy you need to advance your career and protect your assets.

– Updated July 11, 2025.