Accounting & Bookkeeping Firms need professional liability, also called Errors and Omissions (E&O), first, then general liability, cyber liability, a business owners policy once there is an office or equipment, and workers compensation at the first hire. Everything else is driven by client contracts. Who this is for: Accounting firms who bill clients for a tax return, a financial statement, or a payroll filing.
The short version
- Professional liability is the first policy a accounting firm should buy, not the last.
- General liability does not cover a claim about the quality of your work, and errors and Omissions does not cover a visitor tripping in your office.
- Expect a total starting program in the $1,650 to $5,760 range for a small firm.
- Client contracts, not the law, are what usually force limits up to $2M to $5M per claim, sometimes with a $5M excess layer for audit and attest work.
- Cyber belongs in the core stack now because you hold Social Security numbers.
The core stack for accounting firms
Almost every accounting firm we quote ends up with the same four or five policies. The mix moves with headcount, office space, and what your client contracts demand, but this is the starting point.
| Coverage | What it actually pays for | Typical limit | Typical premium |
|---|---|---|---|
| Professional liability, or errors and Omissions | Claims that your work, advice, or a tax return, a financial statement, or a payroll filing cost a client money | $1M per claim / $1M aggregate | $1,200 to $6,000 a year |
| General liability | Someone gets hurt or something gets damaged at your office or a client site | $1M per occurrence / $2M aggregate | $450 to $1,200 a year |
| Cyber liability | A breach, ransomware event, or funds transfer fraud involving Social Security numbers | $1M, with $250K to $1M sublimits inside it | $900 to $4,500 a year |
| Business owners policy | Your office contents, laptops, and business income if you cannot operate | Contents at replacement cost | $800 to $2,200 a year |
| Workers compensation | Employee injury and illness, required in nearly every state at the first hire | Statutory, with $1M employers liability | $400 to $1,800 a year |
Premiums above are ranges for firms in the small to midsize band. Carriers rate accounting firms on gross annual revenue, split by service line (tax, audit and attest, bookkeeping, advisory), so two firms with the same headcount can price very differently.
Why professional liability comes first
For accounting firms, the expensive claim is almost never a slip and fall. It is a client saying your work cost them money. That claim lands on the errors and Omissions policy, not on general liability, and it is the one coverage a accounting firm should never go without.
The three things we see trigger it most often in your line of work:
- A missed election on a partnership return.
- A bookkeeping engagement where duplicate vendor payments went unnoticed for 14 months.
- A compilation delivered to a bank as support for a loan.
General liability will not respond to any of those. It covers bodily injury and property damage to third parties, which is a different problem entirely. You need both, and they are not substitutes.
What your contracts will force you to buy
Even firms that would rather run lean end up buying coverage because a client demands it. For accounting firms that pressure comes from bank and lender engagement requirements, private equity portfolio company vendor rules, franchise agreements, and nonprofit board policies.
The requirements we see most often are $1M per claim / $1M aggregate in professional liability, $1M per occurrence in general liability, workers compensation at statutory limits, and increasingly a $1M cyber liability requirement. Larger buyers ask for $2M to $5M per claim, sometimes with a $5M excess layer for audit and attest work.
What changes as you grow
| Moment | What it changes |
|---|---|
| First employee | Workers compensation becomes mandatory in nearly every state, and Employment Practices Liability Insurance (EPLI) starts to make sense |
| First office or coworking desk | Contents, business income, and a general liability requirement from the landlord |
| First enterprise client | Higher limits, additional insured status, primary and non contributory wording, and a certificate on demand |
| First subcontractor | You now own their mistakes unless your contract and their insurance say otherwise |
| First expat and inbound tax returns | Territory wording on your errors and Omissions policy needs a real look |
What you can usually wait on
Not everything needs to be bought in year one. Directors and officers coverage generally matters once you have firms with outside partners, an advisory board, or an an Employee Stock Ownership Plan (ESOP). Employment practices liability becomes urgent around your fifth to tenth employee. Commercial auto in your own name is only needed once the business owns a vehicle, though driving to client sites for close weeks, audit fieldwork, and year end inventory counts creates a hired and non owned exposure well before that.
What this looks like in practice
Illustrative example. Numbers are typical of claims we see and are not a promise of how any specific claim would be handled.
The setup: A accounting firm with a handful of staff carrying $1M per claim / $1M aggregate in professional liability.
The claim: The matter started with a missed election on a partnership return. The client owed $210,000 in tax and penalties that a timely election would have avoided.
The cost: $38,000 in defense costs and $165,000 in settlement, $203,000 in total, paid inside the policy limit after the retention.
The lesson: The claim was a professional error, so only the errors and Omissions policy responded. A general liability policy alone would have left the firm paying the whole thing out of pocket.
Frequently asked questions
Q: What is the single most important policy for a accounting firm?
Professional liability. It is the coverage that answers the claim your business actually generates, which is a client alleging your work cost them money. General liability is important, but it will not respond to a professional error.
Q: Can I put it all on one policy?
Often yes. Many carriers package general liability, property, and professional liability for accounting firms into a single policy with one bill and one renewal date. Packaging usually saves money, but check that the professional liability limit is separate and not shared with the general liability aggregate.
Q: How much does a full starter program cost?
For a small accounting firm, a professional liability plus general liability plus cyber program commonly lands between $1,650 and $8,189 a year in total. The spread is driven by revenue, services performed, and claims history.
Q: Do I need workers compensation if it is just me?
In most states, a sole owner with no employees can exclude themselves. Two cautions: your clients may still require a policy on the certificate, and if you use 1099 help who are not properly insured, an audit can treat them as employees.
Q: Does a business owners policy include professional liability?
No. A business owners policy bundles property and general liability. Professional liability is a separate coverage part or a separate policy, and it is the one that matters most for accounting firms.
Q: What limits do most accounting firms buy?
$1M per claim / $1M aggregate is the common starting point, and firms move to higher limits when a contract requires it or when a single engagement is large enough that the limit would not cover a bad outcome.
How Morrow helps accounting firms
Morrow is a licensed independent commercial insurance brokerage that specializes in accounting & bookkeeping firms. Building the right coverage stack for a accounting firm is exactly the kind of question we answer every week, and because we place this coverage every day we know which carriers write it well, which forms are broad, and which contract language actually needs an endorsement behind it.
- We read the contract clause and tell you what your current policy already does and does not do.
- We market your account to carriers that have real appetite for accounting firms rather than whoever answers first.
- We issue certificates the same day a client asks, with the endorsements listed correctly.
- We stay on the file at renewal so limits, retroactive dates, and contract requirements do not quietly drift.
Get in touch and we will see how we can help. Tell us what you do, send over any contract that is driving the requirement, and send us the question and we will tell you where you stand. Start at morrowinsure.com or reach the team through the contact options on that page.
One more thing. This article is general information for accounting firms and is not legal advice, tax advice, or a statement of coverage. Policy wording controls in every case, and forms vary by carrier and by state. Have a licensed advisor review your own policy and your own contract before you rely on any of it.
Last updated: Reviewed by the Morrow commercial lines team. Last updated August 2026.