Tax Preparer Insurance

Tuesday, 4 February 2020

The busy tax season has begun! As a tax preparer, you’re doing your best to stay up-to-date with Canada’s tax codes and working with your clients to provide the best service. You spend hours poring over reports and statements to confirm everything is perfect before you file. But what happens when you miss a mistake? At that point, it’s critical for you and your business to be protected by tax preparer insurance if that error results in a lawsuit against you or your company. There are many insurance solutions for a tax preparer that may work for you and we recommend connecting with one of our trusted business insurance brokers to see what the best coverage is for you.

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WHAT OPTIONS ARE THERE FOR TAX PREPARER INSURANCE?

Let’s start with a few questions. Do you work from home? Do you own/rent an office space? Do you visit clients in their homes? Do you have other employees working for you? How costly would it be to replace your equipment? These are all questions that will help determine the right coverage for you, but here is a general breakdown of what is offered for tax preparer insurance:

PROFESSIONAL LIABILITY INSURANCE (ERRORS & OMISSIONS)

Because of the nature of this profession, it’s not uncommon for unintentional errors or omissions to slip by unnoticed, especially when it’s the busy tax season. Professional Liability Insurance (also called Errors & Omissions Insurance) covers you for those mistakes that go undetected. As a tax preparer or accountant, you recognize that missing even one “0” can result in financial loss for your client, and potential claims against you. If a client were to sue you after an audit, and it reveals errors were made on the return, or they must pay CRA penalties and interest due to a mistake in your services, Professional Liability Insurance would help to pay for financial costs incurred during a lawsuit.

GENERAL LIABILITY INSURANCE

If you (and your employees) work in an office space, or if you visit your clients in their homes, other things can go wrong that you’ll want to be covered for. Consider these potential risks:

Your client or employee slips and falls on your property resulting in injury and lawsuit
An employee causes damage to your client’s property resulting in a lawsuit

There can be considerable legal costs and medical bills related to these risks that cannot be ignored. With General Liability Insurance, you would be protected against third-party claims arising from bodily injury or property damage. This type of coverage would also protect you if you or an employee caused damage to a client’s home.

BUSINESS OWNERS POLICY

As a small business owner, you may benefit from a Business Owners Policy (BOP), which bundles multiple types of insurance together to give a comprehensive yet affordable solution. This type of policy can combine Professional Liability and General Liability. It can also include Business Interruption Coverage, if damaged or stolen equipment causes downtime for your business.

TAX PREPARER INSURANCE FOR THE HOME-BASED BUSINESS

Working from home has its advantages and you might think that liability and property damage to your home business would be covered under your home insurance policy, however, it is likely that your home insurance policy does not cover business liability or office-based equipment. Some companies do provide additional endorsements for higher property damage limits and liability coverages for a home-based business. It’s important that you speak with your broker or insurance carrier to see if your home insurance policy provides these options and what limits are offered. Once you’ve determined the coverage you have through your home policy, there are a few more options you should consider for tax preparer insurance if working from home.

Home Office Insurance – If you know your home insurance policy doesn’t give you enough coverage to run your business with peace-of-mind, home office insurance can provide up to $10,000 in business property coverage and a limit of liability coverage up to $1 million. Some policies may even cover damages from lost data and records and property stored off-site.

Business Equipment Insurance – If you have a lot of home office equipment and know that $10,000 will not be enough, this coverage can provide higher limits and will offer additional coverage for damages caused by business interruptions and third-party injuries.

ADDITIONAL COVERAGES TO CONSIDER

Electronic Data Processing (EDP) – We know that your profession relies heavily on technology and software. If you were to lose data due to vandalism, theft, fire, malware or viruses, you can protect yourself with Electronic Data Processing Coverage (also known as Computer and Media Coverage). This coverage would also compensate for hardware, software and computers damaged due to a fire, theft, weather or vandalism.

Cyber Liability – You deal with private client information daily. As cybercrime is constantly on the rise and technology is always evolving, this would be an invaluable part of your tax preparer insurance if a data breach were to happen. These things are unpredictable and in the world of technology, it’s better to be safe than sorry when it comes to your clients’ information. This added coverage would also provide investigator services and public relations in the event of a data breach.

We don’t like to think of what could go wrong, but it’s better to do your job this tax season with the peace-of-mind knowing that if something goes wrong, you and your business will be covered by tax preparer insurance. We encourage you to speak with one of our trusted BIG brokers who specializes in business insurance. Start by giving us a call or clicking this button to get more information or a no-obligation quote!