Business Insurance Policies Available for Tax Preparers:

• General liability insurance
• Professional liability insurance
• Workers compensation insurance

Benefits:

• You’ll be covered if there’s an accident or loss.
• Your plan can cover costs due to negligence.
• Proof of insurance gives your clients confidence in your work.
• Insurance may be required where you do business.

What Type of Insurance Do I Need for My Tax Business?

At Simply Business, our insurance plans can include coverage for accidents and losses, as well as protection if you’re accused of an error, omission, or other negligence. Most often, tax preparers come to us for three different types of policies.

Professional Liability Insurance

Your clients rely on you to prepare their taxes accurately and on time. After all, audits are expensive, and they want to avoid costly penalties. But here’s the truth: no matter how detail-oriented you are, mistakes can still happen. And even if a mistake isn’t your fault, you still will likely need to defend yourself if you’re accused of negligence.

Fortunately, professional liability insurance (PL) can protect you.

This type of policy is designed to cover the costs of a lawsuit, up to your policy limits. That can include hiring a lawyer, settlement fees, and any other litigation costs.

Think you won’t get sued? Unfortunately, it’s estimated that 43% of small businesses have ended up with a court case or the threat of one. Lawsuits are very real—and very common.

Here’s an example. Let’s say you make a mistake while preparing a client’s tax return, and the IRS conducts a time-consuming audit. Your client gets angry and sues you to cover the costs of the audit and a loss of revenue while working with the IRS.

Depending on the size of your client and the audit’s complexity, this can cost anywhere from $2,000 to more than $7,500 depending on the state you’re based in.

If you have professional liability insurance, your policy can cover some or all of these costs, including hiring a lawyer, obtaining evidence or witnesses, and more. This means you may not have to worry about the financial consequences or rely on your personal savings to pay for your case. It is important that tax preparers consider getting professional liability insurance.

In general, you can expect professional liability coverage for tax preparers to cover:

• Negligence or alleged negligence
• Legal defense costs
• Omissions or alleged omissions
• Claims and damages
• And more

However, PL insurance typically doesn’t cover:

• Intentional acts and omissions
• Damage to property
• Medical costs
• Bodily injury
• And more

Commercial General Liability Insurance

Do you own an office or rent a space to meet with clients? If so, you’ll probably need commercial general liability (GL) insurance. This plan covers costs resulting from third-party accidents, property damage, and bodily injury to third parties, including clients and vendors.

General liability insurance may be considered critical for tax professionals, and here’s why: it can protect you from very expensive claims. In fact, the average customer injury or damage claim is about $30,000. Without general liability insurance, you may have to pay for those costs on your own. For many tax professionals, this could be enough to put their businesses at risk.

Consider this example. Let’s say a client walks into your office and trips over a stack of papers you placed on the floor. The client bumps his head on the way down, which causes an injury resulting in a visit to the emergency room.

If you have general liability coverage, your policy can help cover your client’s costly medical bills, plus legal costs if you get sued (up to your policy limit).

Here’s what general liability insurance typically can cover:

• Bodily injury to another person
• Third-party property damage
• Personal and advertising injury
• Medical costs
• And more

Now here’s what general liability insurance usually doesn’t cover:

• Damage to your own property
• Professional services
• Workers compensation or injury to your employees
• Damage to your work
• Vehicles while in business use
• Expected or intentional injury or damage
• And more

Workers’ Compensation Insurance

If you have full-time or part-time employees working for your tax business, you may be required to hold workers’ compensation insurance. Consider administrative staff, other tax preparers, and even students or interns. This type of coverage can cover you if one of these employees experiences an injury or illness on the job.

If you have employees, workers’ compensation insurance is usually a requirement. But it’s important to check to see your state’s laws first. It makes sense as workplace injuries are incredibly costly. In fact, the average work injury cost totals $41,000, and in 2018 alone, there were $170.8 billion of claims. Workers’ compensation insurance is an important way you can protect your business if you have employees.

You can expect most workers’ compensation insurance plans to cover:

• Medical payments
• Lost wages
• Rehabilitation expenses
• Death benefits

Why Should I Get Tax Preparer Insurance?

As a tax preparer, you know the importance of protecting your business financially. But if you’re just starting your business and want to keep costs down, you may think you don’t need insurance now.

Consider this, then. Just one accident or mistake is enough to put your business under if you don’t have coverage. Even if you work at home or have just a couple of clients, you’re exposing your business to risk. Just imagine if a person gets injured while meeting with you or if an unhappy client sues you, even if you didn’t make a mistake.

No matter how safe you are, incidents can happen. Maybe you keep a tidy office and carefully shovel snow in your walkway—or maybe you meticulously review your work to avoid all mistakes. Even then, you’re still at risk for a costly accident, property loss, or error. And the costs can be expensive. Take a look at these averages:

• Reputational Harm — $50,000
• Client Injury or Damage — $30,000
• Client Slip and Fall — $20,000

Chances are, you probably don’t want to face a claim with those price tags. But if you have tax preparer coverage, your plan can likely cover some or all of the costs of a claim or lawsuit.

Think you won’t face a lawsuit? Think again. Our society is quick to sue, especially when it comes to businesses. You can get sued for claims of negligence or reputational harm from your tax services, even if you’ve done nothing wrong.

Plain and simple: you don’t want to put your business at risk. You’ve worked hard to build your livelihood. Protect it, along with your personal assets. At Simply Business, we can help you find affordable business insurance plans that cover your company. It’s easy to use our online tool to compare free quotes from top insurers across the nation. Get started by answering a few quick questions first.

Another bonus? We’ll provide you with a certificate of insurance (COI) that you can share with your clients and vendors. It can position you as credible and professional, which is especially important if you’re just starting out.

At Simply Business, we’re here to make getting insurance simple. Head to our quote tool to see for yourself how easy it is to get coverage!

Tax Preparer Insurance FAQs

Why Choose Simply Business?

We get it. Finding the right tax preparer insurance plan can feel overwhelming. And there’s a lot out there to choose from.

Fortunately, Simply Business is here to make it easy for you to choose the right plan for your business. We’re an online insurance platform that’s focused on small business owners like you. We can help you compare top nationwide plans and the biggest names in the business insurance industry.

At Simply Business, we’re also proud to be one of the fastest-growing online providers of small business insurance. Thousands of business owners, like you, trust us to secure their livelihoods.

Need a few other reasons to choose us?

• We’ll help you find an affordable plan fast. You don’t have the time to spend hours researching business insurance. After all, you have a business to run. That’s why we’re here to make it easy to find and compare affordable plans today.

• Our coverage is flexible. Every business has different needs. We can help you find a plan with increased coverage for your employees or organize a COI to share with a client. We’re here to help you with all your business insurance needs.

• We understand you. Because we work with small business owners every day, we understand their unique needs. You can trust us to protect you when you are most vulnerable.

Remember, you’ve worked hard to build a career as a tax preparer. And Simply Business is right there with you, helping to secure your business for years to come.