As a tax preparer, attention to detail is a must to succeed in your business. You want to provide the best service possible to all of your clients. However, everyone has a bad day now and again. That’s why we recommend that you invest in an errors and omissions insurance policy.
- The 7 best E&O insurance companies for tax preparers
- What is E&O insurance?
- Who needs E&O insurance?
- What does E&O insurance cover?
- How much does E&O insurance for tax preparers cost?
- How to find cheap E&O insurance for tax preparers
The 7 best E&O insurance companies for tax preparers
If you’re looking for an errors and omissions insurance policy, you want the best coverage you can get. We’ve compiled a list of seven of the best E&O insurance for tax preparers we found.
- Simply Business: Best for comparing several quotes
- InsurePro: Best for flexible on-demand coverage at affordable rates
- CoverWallet: Best for comparing several quotes and managing policies online
- Thimble: Best for short term coverage
- Hiscox: Best for specializing in E&O coverage for different industries
- The Hartford: Best if you prefer a reputable carriers
- Next: Best for combining E&O and general liability coverage
Simply Business: Best for comparing several quotes
Simply Business is a comparison service similar to a brokerage. They are based in the UK but expanded their services to the US in 2017. They are a subsidiary of Travelers Insurance, so you will often receive a quote from that company in addition to other quotes.
We requested a quote for a small, single-owner tax preparation service in Madison, Alabama, from Simply Business. They set the limits at $1 million and returned quotes from Travelers and Hiscox.
Pros
- Compare multiple quotes online from one website
- The provided resource library helps you determine the kind of insurance you need
Cons
- Third-party insurers write all policies
- Claims must be filed through the insurer; not Simply Business
- Main offerings are general and professional liability
InsurePro: Best for flexible on-demand coverage at affordable rates
InsurePro is an insurance broker specializing in finding flexible on-demand coverage for small businesses who need insurance coverage for a short period of time at affordable rates. InsurePro works with several insurance companies and offers a great digital experience.
Pros
- Offers affordable and flexible on-demand coverage to help small businesses save money on insurance
- Works with several leading insurance companies to find low-cost coverage
- Offers great digital experience: easy to get quotes online, buy a policy online within a few minutes
Cons
- Third-party insurers write all policies
- Claims must be filed through the insurer; not InsurePro
- May not offer all coverage that a tax preparing business may need. However, InsurePro offers the most important coverage that tax preparing businesses may need: E&O, commercial auto, and general liability coverage.
CoverWallet: Best for comparing several quotes & managing the policy online
CoverWallet is an online insurance broker that delivers multiple quotes after gathering your information. After you receive your quotes, you have the option to purchase insurance coverage online immediately or via telephone. Third-party insurers underwrite all policies.
We requested an E&O quote for a one-person tax preparation service in Madison, Alabama. CoverWallet returned quotes from Hiscox and Chubb. Typically, the entire quote process from start to finish takes 10 minutes or less with CoverWallet.
Pros
- A one-stop-shop for multiple quotes
- Works with several leading insurance companies such as Chubb, Hiscox, Liberty Mutual, etc.
- Offer a complete digital experience from providing quotes online, buy and manage the policy completely online
Cons
- Third-party providers do underwriting
- Online quotes are limited to certain coverages
Thimble: Best for short-term coverage
The quote process from Thimble is quick and straightforward. They have the shortest questionnaire of any we have completed and the fastest turnaround for quotes. They offer coverage based on how long you need it, which includes hourly coverage in some cases. The process of getting a quote from Thimble only takes about five minutes.
When we asked for an E&O quote from Thimble, they quoted us a Business Owners Policy, including liability insurance and commercial property insurance. The quote we got was for a small town in Alabama.
Pros
- Get a quote fast
- Coverages are based on the length of time they are needed
- Products are suitable for contractors
Cons
- Limited coverages
- Underwritten by other insurers
- Can only access customer support online
Hiscox: Best for specializing in E&O coverage for various industries, including financial services
You’ll find Hiscox listed on the London Stock Exchange. The company is based in Bermuda, but they offer coverage in multiple locations. Policies are available for purchase online.
Most of the small business policies Hiscox offers are for professional services such as accountants or architects. They do offer other business coverages, so request a quote to see if they could help you.
Pros
- Online process from quote to purchase
- Covered worldwide with their professional liability coverage
- Policy bundling discounts
Cons
- Sometimes unable to directly purchase coverage
- Alaska doesn’t offer coverage
- Business owner’s policies only available to small businesses
The Hartford: Best if you prefer a reputable carrier
If you’re looking for a name you recognize in the insurance game, look no farther than the Hartford. The company started as a fire insurance company over 200 years ago and has since expanded to provide insurance coverage to many businesses.
The Hartford offers many different policies that can be tailored to your business needs. Primarily, the Hartford prefers to work with large businesses. They have expanded their coverage to include smaller companies recently, and while doing so, they also expanded their online presence.
Pros
- Multiple coverage options
- Deductibles can be waived for large claims
- Website is user-friendly
Cons
- Only available to AARP members in some states
- Some policies aren’t available for online quotes
Next: Best for combining both E&O and general liability coverage
Next is a leading insuretech specializing in offering small business insurance completely online. They started out selling mostly general liability insurance to a wide range of contractors, making it easy and convenient for contractors to get coverage. They have since expanded to offer other coverage such as E&O and commercial auto and workers comp insurance and serve more industries, including financial services such as tax preparing firms.
Pros
- 100% digital experience: getting quotes, buying and managing policies completely online
- Easy to buy multiple coverage at once: combining general liability, E&O, and workers comp in one policy
- Modern way to buy and manage your small business insurance
Cons
- Do not cover many industries and may not offer other coverage
What is E&O insurance?
E&O (Errors and omissions) insurance is also known as professional liability insurance. It is protection against claims a client makes against a professional who provides advice or a service. When a client claims inadequate work or negligence, the errors & omissions policy will kick in to handle legal claims arising from these claims.
Errors and omissions insurance protects your company if a client accuses you of making a mistake. Those mistakes can include:
- Errors or oversights in your work
- Missed deadlines or failure to deliver a service
- Failure to meet a standard of care or professional negligence
- Breach of contract
Who needs E&O insurance?
If you charge a fee for professional services, you should have an errors and omissions policy of some kind. Some professionals are required to carry E&O insurance either by law, a professional association, or a licensing board. In some instances, a client may insist upon E&O policies before working with you.
Professions that can benefit from having E&O coverage include:
- Real estate agents – Learn more at the best real estate E&O insurance companies
- Financial advisors & investment advisors – Learn more at the best E&O insurance for financial advisors and investment advisors
- Insurance agents – Learn more at the best E&O insurance for insurance agents
- IT consultants
- Architects – Learn more at the best E&O insurance for architects
- Accountants – Learn more at the best E&O insurance for accountants
What does E&O insurance cover?
E&O insurance can pay to cover specific things in the event someone, even a client, files a lawsuit against your business. Those coverages include:
- Legal costs: attorney’s fees, court costs, or other costs incurred while dealing with a covered claim, no matter who the legal system deems to be at fault.
- Settlements or judgments: if the business owner is judged to be at fault, then errors and omissions insurance could help pay the settlements or judgments they are required to pay
- Damages or expenses: one example of these payments is if your business has been found guilty of copyright infringement.
How much does E&O insurance for tax preparers cost?
Costs for error & omissions insurance vary dependent on several factors. It’s estimated that a tax preparer spends an average of $500 to $1,000 per year on E&O policies. If you own a tax preparing business with several tax preparers on staff, you will need to have E&O policies for each of your employees.
These are just the averages. Your rates will be different. Be sure to shop around with a few companies or with a top broker like Simply Business, InsurePro, and CoverWallet to compare several quotes to find the cheapest one for you.
Factors impacting E&O insurance cost for tax preparers
The cost of E&O insurance is determined by
- Your industry—is it high-risk?
- The amount of coverage you want or need.
- Liability claims against your business
- Your location
- How many employees you have
Getting multiple quotes and comparing them is the best way to determine your E&O liability costs.
How to find cheap E&O insurance for tax preparers
The best thing you can do to find cheap E&O insurance for your tax preparing business is to shop around. Even if you have a policy in place already, it’s a good idea to compare quotes every year, to see if you can find a cheaper rate.
You can also make sure you put all of your communications in writing and keep careful records. Make sure to send emails to clients when anything changes. Communicate and get everything in writing.
Lastly, you may want to consider lowering the coverage limit or increasing the deductible of your E&O policy. That would decrease the cost of the policy.
Final thoughts
Errors and omissions insurance is also referred to as professional liability insurance. People in professional careers such as accounting or real estate should consider maintaining an E&O policy.
