What Insurance Does a Bookkeeper Need (and Why)?

As a bookkeeper, your job is all about numbers and details: ledgers, spreadsheets, and financial records. But there’s one crucial question every bookkeeper should ask: What kind of insurance does a bookkeeper need? Even the most cautious professional can make mistakes or face unexpected lawsuits. What if you accidentally transpose numbers that cost your client thousands? Or what if a client slips and falls during an office visit? That’s when the right insurance coverage can be a financial lifesaver.

The good news is protection for your business doesn’t have to be complicated. Whether you work as a solo financial professional or manage a team of bookkeepers, having the right insurance coverage helps you focus on what you do best.

In this article, we’ll break down why bookkeepers need insurance, what types of insurance you need, and when to get covered. Plus, we’ll help you understand how bookkeeper insurance protects you — so you can make smart decisions about safeguarding your business.

What Types of Insurance Does a Bookkeeper Need?

Every bookkeeper’s business is different, but several specific types of business insurance will help protect you from the most common risks. Let’s look at the main coverage types that’ll secure your business — and your peace of mind.

Errors & omissions insurance (E&O)

E&O is a type of professional liability insurance focused on protecting you if you make a mistake with a client’s financials — and they sue you for damages.

Think of E&O insurance as your professional safety net: as a bookkeeper, even a tiny error can have huge consequences for client finances. E&O insurance helps cover legal fees and potential settlements should a client sue for damages they feel you caused their business.

General liability insurance

While you crunch numbers in documents, your businesses might still involve real-world interactions. If a client injures themselves at your office or if you accidentally damage a client’s property while working at their location, general liability insurance protects you. It also covers claims of advertising injury or reputational harm, like if a competing firm claims you’ve damaged its reputation through the content in your marketing materials.

Workers’ comp insurance

Whether you have full-time or part-time employees, workers’ compensation insurance isn’t just smart — it can be required by law depending on the state. Workers’ comp helps pay for medical expenses and lost wages if one of your employees is injured at work, whether they develop carpal tunnel syndrome from years of data entry or hurt their back lifting a box of financial records.

Cyber insurance

You might think cyber attacks happen only to big companies — but that’s a dangerous myth. Cyber criminals can target small businesses because they’re easier marks that might not have sufficient security measures in place.

If you fall prey to an email phishing scam that compromises client data, ransomware that locks you out of your computer, or another type of cybercrime, cyber insurance helps cover the costs of recovery, client notifications, and potential legal fees.

Why Do Bookkeepers Need Insurance?

The truth? Nobody likes to think about what could go wrong. But as a bookkeeper, you’re in the business of planning — and that planning includes protecting yourself from risks that could hurt your financial well-being.

A single mistake in a tax filing or payroll calculation could cost your client thousands of dollars. And unlike spilling coffee on someone’s computer (which general liability can cover), financial errors can mushroom, potentially impacting your client’s entire business. Plus, in today’s digital age, you’re handling sensitive data more often than ever.

Even bookkeepers who have years of experience and triple-check every entry sometimes make mistakes or overlook something. Plus, a client could claim you made a mistake even when your records indicate you didn’t. You’ll need liability insurance for those times too.

What Does Insurance Cover for Bookkeepers?

Different insurance policies protect you from different risks. E&O insurance kicks in if a client sues because you made a mistake that caused them some type of damage — like accidentally transposing numbers that led to a costly IRS audit and back taxes owed. But that’s not the only insurance for you to consider. Here’s what each type of insurance typically covers for bookkeepers.

Errors & omissions insurance

• Legal defense costs if you’re sued for mistakes in your work
• Settlements from accounting errors that harm clients financially
• Claims of negligence or oversights in financial records
• Defense costs even when you haven’t made a mistake

General liability insurance

• Bodily injury to clients or visitors at your office
• Damage to client property while working at their location
• Advertising injury claims from competitors
• Legal costs for defending against covered claims

Workers’ compensation insurance

• Medical expenses for work-related injuries
• Lost wages while employees recover
• Coverage for repetitive stress injuries
• Rehabilitation costs if needed

Cyber insurance

• Data breach response and client notifications
• Ransomware attack recovery costs
• Crisis management and PR expenses
• Legal fees related to privacy violations

In the end, the right mix of coverages lets you focus on serving clients instead of worrying about potential risks.

When Should Bookkeepers Get Insured?

Realistically, you should be insured before you start working with clients. Every transaction you handle, every spreadsheet you touch, and every piece of financial advice you give creates potential liability. Even if you’re just starting out or working only a part-time gig, you’re still responsible for your clients’ financial information.

Don’t panic if you’re already working as a bookkeeper — but don’t wait, either. Most insurance policies only cover incidents that happen after your coverage starts, so the sooner you’re protected, the better.

And if you’re expanding your services, hiring employees, or taking on bigger clients, it’s time to review and possibly upgrade your coverage.

It’s also worth noting that some larger clients won’t work with uninsured bookkeepers. Having the right insurance doesn’t just protect you — it adds an air of legitimacy that potential clients can see up front.

Do You Need Bookkeeping Insurance?

Still wondering whether you need bookkeeping insurance? Ask yourself: could you pay for a lawsuit if a client claimed your mistake cost them thousands (or more)? Could you cover all the costs of a cyber attack that exposes your clients’ financial data?

For most bookkeepers (and small businesses), the answer is no.

Think of insurance as part of your bookkeeping toolkit — the same as accounting software or professional certifications. The right insurance is an investment in your business future that costs much less than an uninsured incident.

Ready to protect your bookkeeping business? Berxi makes it easy to get the coverage you need with policies designed specifically for financial professionals. Plus, when you buy direct from Berxi, you can save up to 15% on your premium. Get a quote today — and get yourself peace of mind too.

 

Image courtesy of iStock.com/AndreyPopov

Image courtesy of iStock.com/Charnchai

Last updated on Feb 04, 2025.
Originally published on Jan 14, 2025.

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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