Accountants and CPA professional liability insurance
When clients suffer a financial loss from tax penalties, missed deductions or an audit, they often look to their accountant, even when the work was sound. We build professional liability programs for CPA firms and accounting professionals of every size.
Serving accounting professionals since 1992 · (425) 242-5357
A single claim can reach well into six figures
Professional liability insurance for accountants, also called errors and omissions (E&O), protects your practice and personal assets from claims alleging negligence, errors or omissions in your professional services. A typical CPA malpractice claim can cost $150,000 to $300,000 to defend and settle, and tax-related claims, audit failures and missed deadlines are common sources, even when the allegations are unfounded.
Alongside professional liability, we place cyber liability insurance, workers' compensation and broader business insurance for accounting firms.
Core coverage for accounting practices
Professional liability (E&O)
Claims alleging errors, omissions or negligence in your professional services, including defense costs, settlements and judgments.
- Tax preparation errors
- Audit and review failures
- Financial statement errors
- Missed deadlines and filings
- Negligent advice or recommendations
- Breach of professional duty
Defense cost coverage
Legal defense costs often exceed settlement amounts in CPA claims. Strong defense funding protects your interests from the first demand letter.
- Attorney fees and legal costs
- Expert witness expenses
- Court costs and filing fees
- Deposition and discovery costs
- Appeals expenses
- Pre-claim assistance
General liability
Third-party bodily injury and property damage claims unrelated to professional services, for any firm with an office or client meetings.
- Client injuries at your office
- Property damage to client premises
- Personal and advertising injury
- Products and completed operations
- Medical payments
- Damage to rented premises
Cyber liability
Accountants hold sensitive financial data, which makes them frequent targets. Cyber coverage responds to data breaches, ransomware and privacy violations.
- Data breach response costs
- Client notification expenses
- Credit monitoring services
- Ransomware payments
- Business interruption
- Regulatory fines and penalties
Tax work is the largest source of CPA claims
The complexity of tax law, changing regulations and client expectations create constant exposure. Claims arise from missed deductions, incorrect advice on tax positions, failure to file on time, errors in estimated tax calculations and disputes over aggressive strategies. Even when you follow professional standards, clients may blame you when an audit results in additional tax, penalties and interest.
Good accountants professional liability coverage addresses tax-related claims directly, including IRS audit representation costs and, in certain circumstances, penalty reimbursement. Some policies cover the cost of representing clients in IRS audits that relate to your work.
Common claim triggers: missed deductions or credits; late filings and missed deadlines; mathematical or data entry errors; incorrect business entity advice; real estate transaction errors; estate and gift tax mistakes; retirement plan contribution errors; international tax issues.
Accounting services we cover
Tax preparation
Individual, business, partnership, corporate, estate, gift and trust returns.
Tax planning
Strategic tax advice, entity selection, retirement planning and tax-efficient strategies.
Audit and assurance
Financial statement audits, reviews, compilations and agreed-upon procedures.
Bookkeeping
General ledger maintenance, reconciliation and record keeping.
Payroll services
Payroll processing, tax deposits, quarterly filings and year-end reporting.
Business advisory
Financial consulting, valuations, succession planning and strategic guidance.
Forensic accounting
Fraud investigation, litigation support, expert witness work and dispute analysis.
Financial planning
Retirement planning, wealth management advice and financial projections.
Controllership
Outsourced CFO and controller services, oversight and management reporting.
Compliance services
Regulatory compliance, internal controls, SOX compliance and risk assessment.
M&A due diligence
Transaction advisory, due diligence, quality of earnings and deal structuring.
International tax
Cross-border transactions, transfer pricing and FBAR/FATCA compliance.
How CPA claims unfold
Illustrative examples of accounting malpractice and cyber claims, and how coverage responded.
Missed S-corp election costs a client $180,000
The CPA advised a client to form an S-corporation but did not file the election on time. The client operated as a C-corp for three years, paying significantly higher taxes, and sought recovery of the excess taxes plus penalties and interest.
- Settlement$145,000
- Defense costs$42,000
Illustrative example. Real outcomes depend on the facts and your policy terms.
Added protection for specific exposures
Subpoena response
Costs to respond to subpoenas for client records or testimony, increasingly common as accountants are drawn into client litigation and investigations.
- Attorney fees for subpoena response
- Document production costs
- Deposition preparation
- Court appearance costs
- Motion to quash expenses
Disciplinary proceedings
Defense costs for complaints before state boards of accountancy, the AICPA or other professional bodies, protecting your license and standing.
- State board complaints
- AICPA ethics investigations
- Peer review defense
- License defense costs
- Professional hearing representation
IRS audit representation
Costs to represent clients before the IRS when an audit relates to returns or advice you provided.
- IRS examination representation
- Appeals conference attendance
- Document preparation
- Correspondence audit response
- Office audit representation
Employment practices liability
Claims by employees alleging discrimination, harassment, wrongful termination or other employment-related violations.
- Discrimination claims
- Harassment allegations
- Wrongful termination
- Retaliation claims
- Wage and hour disputes
Network security for CPAs
Enhanced cyber coverage for firms using tax software, cloud accounting and client portals.
- Tax identity theft response
- Client portal breaches
- Cloud accounting failures
- Wire fraud and social engineering
- Vendor and software breaches
Prior acts coverage
Extends coverage to services performed before the current policy period, essential when changing carriers or increasing limits.
- Full prior acts (no retroactive date)
- Historical work protection
- Seamless coverage transitions
- Merger and acquisition coverage
- Predecessor firm acts
Practice areas that call for closer attention
Some services carry more professional liability exposure. Knowing which helps you manage the practice and set adequate limits.
SEC audit clients
Public company audits carry large exposure; securities litigation can produce multi-million-dollar claims. Requires specialized coverage and significantly higher limits.
Investment advisory services
Investment advice may not be covered under standard accountants policies. If you hold securities licenses, separate coverage may be required.
Estate and trust work
High-value estates, complex trusts and wealthy clients create significant exposure; errors can bring substantial tax consequences and family disputes.
Business valuations
Valuations for divorces, buy-sell agreements and estate planning are frequently disputed, and parties with adverse interests may both claim the valuation was wrong.
Merger and acquisition work
Due diligence failures, quality of earnings disputes and structuring errors can bring claims from buyers, sellers and investors.
Expert witness services
Testimony exposes you to claims from both sides, and opinions can be challenged years after the engagement ends.
Common gaps in CPA programs, and how to close them
Inadequate limits
Many accountants carry $500,000 to $1 million limits that defense costs alone can exhaust; complex claims routinely exceed $250,000 in defense. Set limits by client profile, services and engagement size, and consider $2 million to $5 million for firms with audit clients or high-net-worth individuals.
No cyber coverage
Standard accountants E&O may exclude cyber incidents. Add standalone cyber or a robust cyber endorsement; minimum $1 million cyber limits are recommended.
Investment advice exclusion
Most CPA policies exclude investment advisory services. Disclose all services to your carrier, obtain separate investment adviser E&O if you hold securities licenses, and ask about endorsements for incidental investment advice.
Prior acts gap
Changing carriers without prior acts coverage leaves historical work unprotected, and claims often arise years later. Negotiate full prior acts or the earliest retroactive date, and never accept one later than your original coverage inception.
Subcontractor work
Your policy may not cover work performed by others. Require certificates of insurance from subcontractors and confirm coverage for work you supervise but don't personally perform.
Claim reporting delays
Claims-made policies require timely reporting, and late reporting is a common basis for coverage disputes. Report potential claims and circumstances promptly; when in doubt, report it.
What we bring to accounting firms
Exposure knowledge
We understand the exposures accountants face, from tax claims and audit failures to cyber threats aimed at financial data.
Carrier selection
Access to carriers that specialize in CPA professional liability, with tailored coverage forms and competitive pricing.
Coverage analysis
We review policy language in detail, identify gaps and make sure coverage matches the services you actually offer.
Claims advocacy
When a claim arises, we work to make sure coverage responds as intended and your defense is handled well.
Risk management
Practical guidance on engagement letters, documentation and procedures that reduce claims exposure.
Pacific Northwest focus
Since 1992 we have helped accounting professionals across the Pacific Northwest protect their practices.
Get a CPA insurance review and quote
A confidential consultation, a review of your current coverage and quotes from specialized carriers.
Coverage descriptions are general summaries for education. They are not legal, tax or coverage advice, a statement of coverage, an offer or a binder. Scenarios and dollar figures are illustrative examples, not representations about any business. Coverage, limits and eligibility are governed by the terms, conditions and exclusions of the policies issued and are subject to underwriting.