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.

Zensurance - Tax Preparer

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Tax Preparation Professional

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.

Tax preparer insurance is a uniquely designed errors and omission policy package protecting tax professionals 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 tax liability insurance policy you need.

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.

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.

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

Getting insured is quick and easy!

Complete our 5-minute online application for a free tax preparation insurance quote.

Common claims scenarios

Tax preparer making an error

Problem: After preparing and filing financial statements and a tax return for a client, the Canada Revenue Agency audits the client and reassesses their tax records from the past five years. The reassessment finds incorrect information and finds the client responsible for additional taxes and interest charges. Your client sues you for the errors made that led to the audit, reassessment, and tax bill.

Outcome: Your errors and omissions insurance may cover the cost for your legal expenses as well as any funds related to the court-ordered settlement.

cyber hacker stealing financial infromation

Problem: While exchanging sensitive, confidential financial information with a client by email, you accidentally include other people unassociated with the client. Your client sues you for damages caused by the data breach.

Outcome: Your cyber liability insurance may cover the cost to hire a lawyer and defend yourself and any financial damages awarded to your client by the court.

burglarized commercial office

Problem: Your office is burglarized, and several laptops and other office equipment are stolen.

Outcome: Your commercial property insurance may cover the cost to repair the damages to your office as well as replace your stolen computers and office equipment.

Frequently asked questions

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.

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.

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.

Take a few minutes to fill out our online application and get a free quote.