How Much Does Bookkeeper Insurance Cost?

You work hard to provide accurate bookkeeping services that help your clients keep track of finances, manage expenses, and comply with labor or tax laws. But what happens if a client claims you failed to pay their employees on time or a mishap destroys important financial records? Bookkeeper insurance covers these and other claims that result from error, injury, or loss. Keep reading to find out what policies you should consider and what bookkeeper insurance costs.

What Types of Coverage Do Bookkeepers Need?

When you think of the kinds of insurance that are helpful for bookkeepers, the first type that comes to mind might be a policy to cover any calculation and data entry mistakes. But it’s important to think beyond numbers. Meeting with clients and keeping copies of records adds risks like potential injury (to a visitor) and loss (to things like data or technology) that increase your liabilities. Regardless of the mishap, you want to be sure you’re covered in the event of a claim or unforeseen event.

Errors & omissions (E&O) insurance

Errors and omissions (E&O) insurance for bookkeepers is exactly what it sounds like: coverage for claims relating to mistakes or negligence on your part.

Your clients rely on your bookkeeping skills to keep their businesses running smoothly and their finances in order. Inaccurate information, late reports, or missed payroll can lead to interruptions, losses, or even lawsuits for their companies.

But mistakes do happen, even with a good system or team, and E&O insurance is there if a client ever claims you:

• Made a miscalculation that caused them to lose money
• Provided an inaccurate report that led to a tax penalty
• Missed paying an invoice, which resulted in a late fee
• Failed to process payroll, which led employees to file wage claims
• Didn’t meet a deadline and fell short of your promised standard of service

Clients may file these claims for all kinds of reasons, even if you didn’t do anything wrong. It’s important to have a policy that will handle your legal expenses just in case you need it.

General liability (GL) insurance

A general liability claim can cost your business a good deal of money. In fact if a lawsuit is involved, a GL claim can average more than $75,000 to defend and settle. This is why having general liability insurance (GL) in addition to E&O can be helpful.

A general liability policy typically covers:

• Bodily injury (not related to medical malpractice) to clients
• Damage to clients’ property
• Reputational harm to a client or their business
• Advertising injury resulting from false or exaggerated claims

Nobody wants accidents to happen, but if a client gets hurt after tripping over a loose rug in your office or you accidentally spill coffee on their laptop while reviewing their books, GL can help cover the cost of making it right.

Reputational and advertising injuries are less straightforward. A client may claim that you advertised a higher quality of service than you delivered or that a mistake in their books snowballed into a public scandal. Whatever the case, your general liability insurance should handle:

• Medical expenses for injured clients
• Repair or replacement costs for damaged property
• Legal costs, including lawyers’ fees
• Judgment and settlement costs

Commercial property insurance

You can think of commercial property insurance as the “expect the unexpected” insurance. While it differs from general liability insurance in that it is designed to cover your interest in property (as opposed to providing coverage and a defense with respect to claims that are made against you), it can complement a general liability policy with coverage for direct physical loss of your damage to your covered property due to:

• Fire
• Theft or burglary
• Water or freezing
• Wind or hail
• Certain other natural disasters

Insurance Journal reports that 60% of all business claims fall into the foregoing categories.

Property insurance coverage isn’t limited to building damage; this type of insurance also covers:

• Office furniture and fixtures (such as desks, cabinets, and signs)
• Equipment (including computers, printers, and mobile devices)
• Other personal property that’s used in your business

A commercial property insurance policy can pay for costs associated with repairing, replacing, or rebuilding after damage or a disaster so you can continue serving your clients with as little interruption as possible.

However, some commercial property insurance policies may not cover certain natural disasters (like floods, hurricanes, or earthquakes). Check your policy to see whether you need additional insurance, especially if your rental agreement requires specific coverage.

Errors & Omissions Insurance for Bookkeepers Cost

NerdWallet reports that the average cost of an E&O insurance policy for small businesses like bookkeepers is $500 to $1,000 per year, or between $42 and $83 per month. But through Berxi, you can find bookkeeper insurance policies starting at $22 per month and get coverage for:

• Legal fees
• Court costs
• Settlement costs
• Wage loss
• Trial expenses
• Regulatory and licensing investigations

General Liability Insurance for Bookkeepers Cost

For general liability coverage, bookkeepers can expect to pay an average of:

• $42 per month
• $504 per year

Some estimates put the yearly average higher at around $1,057. How much you pay will depend on details that affect the likelihood of an accident, such as the number of clients you serve or the safety measures you have in place at your location.

At Berxi, you can add general liability coverage to your bookkeeper E&O policy for as little as $150 annually and potentially save thousands on your premiums every year.

Commercial Property Insurance for Bookkeepers Cost

The average cost of commercial property insurance ranges from:

• $60 to $70 per month
• $720 to $840 per year

Business.com reports similar numbers, citing a median cost of $67 per month or $800 per year.

Factors That Impact Bookkeeper Insurance Cost

Many factors can affect your final bookkeeper insurance costs, including:

• Level of risk from crime or natural disasters in your area
• Potential fire risk from the building materials in your home or office
• Risk level of other businesses in your office building
• Your clients’ industries, the extent of their records, and the complexities of their finances
• Length of time you’ve been in business and the kind of reputation you’ve built with customers
• Amount of property and possessions you’re insuring
• Number of claims you’ve made in the past
• Amount and type of coverage included in your policy

How to Lower the Cost of Your Bookkeeper Insurance

Some of the factors that affect the cost of your bookkeeper insurance are under your control. That means you can make changes to lower your premiums, such as:

• Conducting regular liability audits to identify new risks
• Upgrading your office, home, or building to be more resistant to fires and disasters
• Installing safety features like ramps, railings, or slip-resistant flooring to reduce the risk of client injuries
• Creating an emergency preparedness plan to improve your response to disasters
• Shopping around for policies directly from insurers instead of through brokers
• Looking for bundled policies, which may cost less than purchasing each policy separately
• Reviewing your insurance policies regularly to make sure you’re not paying for coverage you don’t need

Ask your insurance company about other potential options for discounts that could lower your bookkeeper insurance costs even more.

To get an idea of how much you could save, get a quote for a liability insurance policy from Berxi. You could save as much as 15% by buying direct, plus you get the assurance of a carrier backed by an A++ financial strength rating and world-class customer support. Even more, Berxi allows E&O customers to add a basic general liability policy for just an additional $150 to $170. If you have questions about this, or anything else, be sure to check out the Berxi support page and get assistance.

 

Image courtesy of istock.com/Liubomyr Vorona

Image courtesy of istock.com/Korrawin

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The views expressed in this article are those of the author and do not necessarily reflect those of Berxi™ or Berkshire Hathaway Specialty Insurance Company. This article (subject to change without notice) is for informational purposes only, and does not constitute professional advice. Click here to read our full disclaimer