Accountants and Business Insurance in PA

Just like any other business in Pennsylvania, accountants and CPAs need to safeguard themselves against loss or lawsuits through proper insurance. Because of the type of work we do, more than one type of insurance may be required. 

Why you might need insurance

As a financial expert, your clients turn to you for help and trust you with their most sensitive information. And although your goal is always to provide the highest quality and the most accurate service, occasionally something goes wrong, or you are accused of wrongdoing or injury. If you are insured for such potentialities, your business and your personal finances should be secure from loss or injury. Some examples of potential harm or loss to your business, a client, or a third party include: 

  • Overlooking a new law or policy
  • Making an error in calculation
  • Omitting a major expense or some other critical financial factor
  • Missing a critical deadline
  • Providing inaccurate advice or improper estimates that the client acted upon
  • Cyberattack or data breach
  • Property damage
  • Business interruption
  • Personal injury to client or third party
  • Personal injury to employee
  • Copyright infringement 

This is not a complete list, but it demonstrates that we, as business owners and financial advisors, need to be prepared for a variety of contingencies. 

Types of insurance

Different types of insurance cover different kinds of events. Accountants’ Professional Liability Insurance, also known as professional indemnity insurance, provides coverage for lawsuits or damages caused by (or allegedly caused by) errors and omissions in your capacity of providing financial services. This type of insurance is a must in our line of work. Other types of insurance depend on your particular situation. 

A Business Owners Policy rolls three types of insurance into one, which is usually more economical than paying for each separately. These three are:

  • Business Liability Insurance, which covers property damage and bodily injury to others (not employees) and pays for legal costs, settlements, and court judgments
  • Business Interruption Insurance, also called business income insurance, which covers loss of income if your business is temporarily closed (for instance, due to a significant fire in a neighboring building, road work, etc.) and also covers damaged merchandise and costs to temporarily move to another location
  • Commercial Property Insurance, which covers business location and business equipment that may be damaged by a covered event, such as a tornado

You may not need all three of these forms of insurance. For instance, if you work from home and do not see clients in person at home, you may look into a home office rider on your home insurance policy, which may be more economical.

Workers’ Compensation, which is mandatory in PA for almost every type of company or employee, will cover being injured on the job or being injured in a car accident when driving for company business. It is not likely your employees will be exempt: Workers’ Comp exceptions in PA include those who already have other workers’ comp, such as railroad workers and federal employees; short-term agricultural employees (with certain stipulations); and employees exempt for religious belief or executive status. 

A Cyber Insurance Policy protects against losses from cyberattacks. It is critical that you take steps to protect all your data, both digital and hardcopy, through your own well-defined cybersecurity protocols. However, according to Verizon’s 2020 Data Breach Investigations Report, personal data was accessed in nearly 60% of all breaches that occurred that year, so additional precautions are necessary. A cyber insurance policy should protect against data breaches and cyber and terrorist attacks, should include a “duty to defend” in lawsuit or regulatory investigation, and should provide coverage in excess of any other applicable insurance. You will want to look into both first-party coverage and third-party coverage. 

Determining and acquiring the right level of insurance for your PA accounting firm may seem like a daunting task, however, providing yourself and your clients with the right coverage can protect your business well into the future and is worth the investment. Talking to other accountants about what they do can help you take the first necessary steps. PSTAP members enjoy the opportunity to ask each other questions and request advice about running their businesses. If you’re not already a member, learn more about the Pennsylvania Society of Tax & Accounting Professionals (PSTAP) today at