How Much Does Tax Preparer Insurance Cost?

Tax preparer insurance coverages can help after mistakes are made, negligence occurs, or cybercrimes impact your customers’ info. But when looking into professional liability coverage, it’s helpful to get an idea for what tax preparer insurance costs, the financial stability of the coverage you’ll receive, and what factors influence your premiums.

In this article, we break down the types of insurance policies to consider, how much tax preparer insurance costs on average, and the steps you can take to save money while ensuring the most common tax preparer–claim types are covered.

Types of Coverage Tax Preparers Need

Tax preparation may involve three main risks:

• Mistakes in making calculations, giving tax advice, or complying with tax laws
• Injuries to clients or damage to clients’ property at your workplace or on their premises
• Loss or theft of your clients’ personal data

You can get insurance policies designed for each type of risk to help ensure your business is fully covered in the event of a claim.

Errors & omissions (E&O) insurance

Errors and omissions (E&O) insurance is a type of professional liability insurance for professionals like tax preparers. It covers claims related to mistakes (errors) and times when you forget to do something you should (omissions). These may include:

• Making mistakes on clients’ tax returns
• Failing to follow new or updated IRS regulations
• Missing a filing deadline
• Giving wrong or outdated tax advice
• Falling short of clients’ expectations for quality of service

For example, a client may claim that your miscalculation cost their business thousands of dollars in penalties, or your failure to complete an itemized deduction form may lead to a claim from a client whose tax bill was much higher than they expected.

Anyone can make these kinds of errors, especially during the busy tax season when you’re dealing with a pile of returns and clients are calling you at the last minute or showing up at your door with another box of receipts they just found.

Ideally, an E&O policy will cover:

• Attorneys’ fees
• Court costs
• Arbitration costs
• Settlement and judgment costs
• Your cost to attend trials

Some policies also include coverage for wages or business income lost during the time you spend dealing with a claim.

General liability insurance

A general liability (GL) policy covers claims related to bodily injury and property damage, which could happen if you meet with tax clients at your office or in your home. If you rent an office or office building, your landlord may require you to carry this kind of policy.

Slip-and-fall accidents and other personal injuries are common general liability claims. According to Insurance Business, the average slip-and-fall claim could cost a business $20,000.

You could also face a claim if a client’s personal property is damaged while they’re on your premises, such as if a dead tree drops a branch on their car and dents the hood or they damage a tire after running over broken glass in your parking lot.

Cyber insurance

Cyber insurance covers your business if you become the target of cybercrimes like data breaches, data theft, or ransomware attacks. This kind of coverage is important when you handle other people’s taxes because you have to store records like names, contact information, and social security numbers. If a hacker gets access to these records, it puts your clients at risk of financial loss or identity theft.

Cybercrimes don’t just happen to big businesses. All kinds of personal information can be valuable to hackers, and they’ll go after it, no matter the size of your business.

And data breaches are expensive: the Small Business Administration reports that an entrepreneur’s average cost for a cyber attack in 2023 was $8,000. For small businesses with fewer than 500 employees, the cost was an average of $164 for each breached record and just under $3 million total per breach.

To help you handle these costs, a cyber insurance policy usually includes coverage for:

• Legal expenses
• Data recovery
• Ransom payments
• Regulatory investigations
• Incident and threat responses like repairs and investigations
• Customer protection, such as credit and identity monitoring

However, it’s common for policies to exclude incidents that happen when an employee’s actions lead to a breach or hackers get in through a vulnerability that you knew about but didn’t fix.

Errors & Omissions Insurance for Tax Preparers Cost

You can expect to pay between $50 and $60 per month or $600 to $720 per year for errors and omissions insurance, according to Insurance Business.

Getting your E&O policy through Berxi could cost you a lot less, which is good news for your tax preparation business. Here’s what the average professional pays for a Berxi policy:

• $301.83 annually with a $100,000 per claim and $250,000 per year limit
• $570.32 annually with a $1 million per claim and $2 million per year limit

These rates are based on data from March 2024 for professionals living in Texas, making $50,000 a year, choosing a $1,000 deductible.

General Liability Insurance for Tax Preparers Cost

Insurance Business states that GL typically costs about $480 to $660 per year. This breaks down to $40 to $55 per month. However, tax preparer GL at Berxi (launching in states throughout 2025) starts at $350 per year, costing customers about $29 per month. This rate is based on 2025 data for tax professionals nationwide making $50,000 a year, choosing limits of liability of $1 million per claim and $2 million per policy term.

Cyber Insurance for Tax Preparers Cost

Insurance Business reports that protecting your business financially from breaches and other cybercrimes will cost you an average of:

• $140 to $150 per month
• $1,680 to $1,800 per year

A Berxi product specialist may be able to help you get cyber insurance for less than $1,000 per year. Reach out to our customer support team about saving hundreds on your annual premiums.

Factors that Impact Tax Preparer Insurance Cost

These are just average prices for tax preparer policies. You might pay more or less depending on factors like:

• The amount of liability limits you choose
• The size of your business
• Your claims history
• Where your business is located
• Your annual revenue
• How long you’ve been in business
• The types of clients you work with

Insurance companies use these details to assess risk based on the likelihood of a claim being filed against you.

How to Lower the Cost of Your Tax Preparer Insurance

You can lower your level of risk — and your insurance premiums — by:

• Buying directly from the insurance company instead of going through a broker
• Adjusting your deductible and your coverage limits
• Reviewing policies regularly and removing coverage you no longer need
• Updating your coverage to match the risk level of your client base
• Fixing potential safety hazards on your property
• Putting strong cybersecurity protections in place, such as encryption, firewalls, and anti-virus and anti-malware software
• Adding a basic GL policy to your existing Berxi E&O policy

Starting your search for a liability policy at Berxi could mean paying an average of 15% less for tax preparer insurance. As part of Berkshire Hathaway Specialty Insurance Company (BHSIC), Berxi offers insurance backed by an A++ rating from AM Best and AA+ from Standard & Poor’s.

Ready to protect your tax prep 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.

More:

• Small Business
• Insurance EDU

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