You spend your days crunching numbers, poring over data, and helping others stay financially prepared. But when was the last time you looked over what you’re paying for your own insurance?
Your tax preparer insurance cost should reflect your actual risks and the stage your business is currently in. It’s not a set-it-and-forget-it kind of thing. Overpaying for coverage that you don’t need (or underinsuring yourself without realizing it) can be an expensive mistake in the long run.
That’s why we’ve put together this guide to help you take a step back, reassess your policy with fresh eyes, and determine if there are ways to reduce costs or improve your insurance coverage to better fit your needs.
Let’s take a look at a few common questions that can help you make smarter decisions about what you’re paying for when it comes to your tax preparer insurance.
Simplify your search for insurance. Get a free quote in just 5 minutes.
Start off by taking a close look at what your policy or bundle of policies includes. Are you covered in your main areas of risk exposure? As a tax preparer, your insurance should include professional liability (also called errors and omissions), along with general liability if you meet with clients in person, and cyber insurance if you handle any sensitive information online.
Sometimes, a policy may appear budget-friendly because it omits essential protections. For example, cyber insurance is often overlooked, but it’s crucial if you digitally store tax documents or send client data via email. Without it, a data breach or tech issue could become a major headache and a considerable expense.
It’s also worth checking whether your policy protects subcontractors and to what extent it covers employee-related risks if you have a team that works for you. Every tax practice is different, and your coverage should reflect the way you work.
Other policies that tax preparers may overlook include business property insurance(which can be bundled with general liability for a Business Owners Policy) and a commercial auto policy, if you drive a company vehicle.
While you may not be missing coverages, if you’ve been in business for a long time, it’s always good to review your policies with your insurance broker or carrier to see if your coverage still fits your business needs.
A reasonable tax preparer insurance cost won’t cut corners on your coverage; it’ll ensure you pay a fair price for the right protection. If there are gaps in your coverage, it could cost more in the long run than paying a little more up front for a more complete policy.
Not every policy is built for how you operate. Some come with extra coverages that may sound helpful but are not necessary for your setup.
For example, if you work entirely from home and never meet clients in person, you may not need business property coverage or retail space endorsements. These add-ons can quietly increase your tax preparer insurance cost without giving you much value in return.
The good news is that you can streamline your policy without losing the coverage that really matters by matching your insurance to the way you run your business. If your work is mostly online, ensure your cyber and professional liability protections are robust.
However, you likely don’t need broad property or commercial auto coverage unless you use a company car or physical retail space as a part of your regular operations.
Take a few minutes to read through your current policy. If something seems out of place or unrelated to your actual services, it might be time to adjust. A lean business can have lean insurance, as long as all of the essentials are still covered. You shouldn’t have to pay for protection that you’ll never use.
Take a second to think about the work you do every day. Now imagine that a long-time client files a lawsuit claiming a mistake on their tax return cost them thousands of dollars in penalties, and they want you to pay for it. The legal fees alone could stretch into five figures, even before any settlement is discussed.
Would your current policy be enough to help you make your way through that?
When reviewing your tax preparer insurance cost, don’t stop at the price tag. Look closely at your policy limits and how defense costs are handled. Some policies include legal fees within the overall liability limit, which means that every dollar spent on a lawyer leaves less room for covering a settlement.
Additionally, the overall defense costs may be lower than if you chose to add on defense limits. That would keep those costs separate, giving you more room to breathe in a high-pressure situation like this one.
Low-cost insurance can seem like a win-until it isn’t. If your policy can’t hold up in a real crisis, the savings won’t matter. A slightly higher premium could provide you with broader protection, better claim support, and fewer financial surprises when things become stressful.
The best way to measure your coverage is to ask yourself, “If my worst-case scenario happened, would this policy protect me, my reputation, and my business?” If the answer is no, it’s time to reassess.
A lot can change in a year. Maybe you’ve taken on more clients. Maybe you’ve downsized. Maybe your services look completely different from when you first bought your policy. If you haven’t taken a fresh look at your tax preparer insurance cost lately, now is the perfect time.
If you’ve reduced your workload, narrowed your client list, or no longer have employees who work for you, your coverage limits may be higher than you need. That means there could be room to lower your premium without losing the protection that matters for your business.
On the other hand, if your client base has grown, you’ve started hiring subcontractors, or you’re relying more on digital tools to manage sensitive data, your insurance might need to catch up. More activity usually means more risk, and you’ll want a policy that accurately reflects your current scope of work.
Insurance should always match the current size and setup of your business. Not last year. Not when you first got started. And not where you want to be, although a good policy will ensure you safely reach your business goals. A quick check-in with a licensed agent or a platform like CoverHound, can help you make sure your coverage (and insurance costs) still make sense for your needs.
You might be paying a fair price, but are you getting the best value for it? Comparing carriers can make a difference here, mainly because what you value will be different from what someone else may value, and what you value will change over time.
Some may offer more comprehensive coverage, greater flexibility, or faster service at a very similar price point. If it’s been a while since you’ve reviewed your policy, this is a good opportunity to explore other options.
A licensed broker or online platform like CoverHound can walk you through all of your options side by side, so you can see how your current plan stacks up to other policies that are available.
Shopping smart doesn’t mean you have to cut corners. Shopping smart is all about knowing your options and how they align with what will give you the most value, so you can make a decision that you feel confident about.
You don’t have to figure it out alone, either; getting help from experts can save you time, stress, and money too.
You spend your time helping others make smart financial decisions, and your insurance should do the same for you. Your tax preparer insurance cost should reflect the work you do, the clients you serve, and the protection you need to keep moving forward and growing your business with confidence.
With CoverHound, you can compare quotes from over a dozen A-rated carriers, fine-tune your coverage, and find a policy that works for you, not the other way around.
Whether you're looking for better value or making sure you haven’t outgrown your current policy, we’re here to help.Get a quote from CoverHound today and find coverage that fits your work, your budget, and your peace of mind.
Insurance shopping simplified
Insurance shopping simplified
