Tax Preparer Insurance

Tax Preparer Insurance

Handling confidential financial documents and providing advice is your specialty.

Protect your business and reputation with a customized insurance policy for tax preparers.

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Zensurance - Tax Preparer
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Insurance for tax preparers

You spend hours and days scrutinizing and examining your clients’ financial statements and documents while working within Canadian tax laws and regulations to help them understand their obligations and find ways for them to save money. It’s a heady responsibility and one that comes with significant peril if you make a mistake. A comprehensive tax preparer insurance policy can help shield you and your business from the cost of a third-party lawsuit.

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What is tax preparer insurance?

Insurance for tax preparers is a uniquely designed policy package that protects you from third-party lawsuits, claims, and any financial damages arising from an alleged error you may have made. If you make a mistake on one of your client’s tax returns and your client loses money, miss a critical deadline, or fail to adhere to Canadian tax codes, you may be subject to an expensive third-party lawsuit or regulatory discipline. Reduce the stress and financial uncertainty related to your work and get the insurance policy you need.

What does it cover?

A tailored tax preparer insurance policy features different types of coverages depending on your needs, including:

  • Errors and Omissions (E&O) Insurance: Also called professional liability insurance, E&O coverage shelters tax preparers from legal costs and damages related to any allegations of financial loss because of your work, negligence, misconduct, or failing to deliver a service as promised.
  • Commercial General Liability (CGL) Insurance: Provides you with financial protection if you are sued by a third party alleging bodily injury or property damage because of negligence or an unexpected accident (like a client slipping, falling, and suffering an injury while visiting your office). CGL includes coverage for costs to repair a property you rent for your business and protects you from allegations of slander, libel, defamation, and false advertising.
  • Cyber Liability Insurance: Protects you from expenses associated with first- and third-party lawsuits related to a data breach or cybercrime that involves your computers, software, and customer data. It includes funds for legal fees, repairs to your computing systems and software, and coverage for losses you sustain following a cyber-attack.
  • Commercial Property Insurance: Provides financial coverage for physical losses or damages to your commercial space and your contents in it including computers and furniture because of a natural disaster, severe weather, fire, flood, theft, or vandalism.

Who needs it?

E&O insurance policies are recommended for all finance and accounting professionals including: 

  • Accountants
  • Bookkeepers
  • Chartered Professional Accountants
  • Enrolled agents and tax advisors
  • Tax preparers and specialists

How much does it cost?

E&O insurance for a tax preparer typically starts around $400 per year with a $250,000 coverage limit.

The final cost of your premium will depend on a variety of factors, including: 

  • Your annual and projected revenue
  • The services you provide
  • Your years of experience in the industry
  • Where your office is located
  • How many employees you have
  • Previous legal or tax issues

You have the option to choose the types and level of coverages you want. Most tax preparer professionals carry at least $1 million of liability coverage. Speak to a Zensurance licensed broker to determine what insurance options are best for your business.

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Common claims scenarios

Frequently asked questions

Is errors and omissions insurance mandatory for tax preparers?

It depends. The province you live in or any professional association you are a member of may require you to carry a specific amount of errors and omissions insurance. For instance, any registered firms or professionals who are members of the Chartered Professional Accountants of Ontario are required to carry an E&O policy.

Can a former client sue me for an alleged error made on a tax return filed years ago?

Yes. Both your former and current clients could sue you for real or alleged errors. Whenever a mistake or negligent act harms one of your clients financially, there are often consequences. For example, if you missed an allowable tax deduction or your work results in a client underpaying their tax bill and they are subject to penalties and interest on the outstanding debt, that client may sue you to recover their losses.

Are tax preparers liable for their work?

As a professional tax preparer, you help your clients understand their tax obligations. However, your profession can expose you to a third-party lawsuit over the handling of highly sensitive information. If one of your clients gets in trouble with the Canada Revenue Agency for the way they’re managing their taxes, you may be subject to litigation.

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Safeguard your professional reputation, business, and personal finances with a comprehensive tax preparer insurance policy.

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Our licensed brokers will shop our partner network of more than 50 leading Canadian insurance carriers to find you the coverage you need at the cheapest premium available on the market.

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