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Bookkeeping Insurance Policy Information

Bookkeeping Insurance

Bookkeeping Insurance. As a bookkeeper, you work with sensitive, personal financial information which could expose you to a lot of risk. Even the best bookkeeper can make a miscalculation or omit data that can cause a client to suffer financial loss.

Also, running a business or professional firm means that you face many business risks. The good thing is that you can get bookkeeping insurance to protect you from the many threats you face.

Bookkeeping insurance protects your business from lawsuits with rates as low as $27/mo. Get a fast quote and your certificate of insurance now.

Below are some answers to commonly asked bookkeeping insurance questions:


What Is Bookkeeping Insurance?

Bookkeeping insurance is a type of insurance that provides protection for bookkeepers and their clients from financial losses due to errors or omissions in the bookkeeping process.

It typically covers things like errors in data entry, incorrect entries or calculations, and other mistakes that may occur during the bookkeeping process. This type of insurance may also include coverage for fraud or theft committed by the bookkeeper or their employees.

The coverage amount and specific terms of a bookkeeping insurance policy will vary depending on the insurer and the specific policy purchased.

How Much Does Bookkeeping Insurance Cost?

The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small bookkeeping businesses ranges from $27 to $39 per month based on location, size, payroll, sales and experience.

Why Do Bookkeepers Need Insurance?

Bookkeeper Using Adding Machine

Bookkeepers are responsible for handling financial transactions and maintaining financial records for businesses, organizations, and individuals. Given the sensitive nature of this work, bookkeepers need insurance to protect themselves from potential risks and liabilities.

One reason bookkeepers need insurance is to safeguard against errors and omissions. Despite their best efforts, bookkeepers may make mistakes or overlook important details in their work. This can lead to financial losses for their clients and potential legal action. Insurance can help cover the costs associated with any errors or omissions made by the bookkeeper.

Another reason bookkeepers need insurance is to protect against cyber attacks and data breaches. As bookkeepers handle sensitive financial information, they may be targeted by hackers or other cybercriminals. Insurance can help cover the costs associated with any data breaches or cyber attacks, including the cost of repairing any damage done and compensating clients for any losses they incur.

Finally, bookkeepers may also need insurance to protect against claims of professional negligence or wrongdoing. Even if a bookkeeper has not made any mistakes, they may still face accusations of negligence or wrongdoing. Insurance can help cover the costs of defending against these claims and any potential damages awarded to claimants.

Overall, insurance is an essential tool for bookkeepers to protect themselves and their clients from potential risks and liabilities. Without insurance, bookkeepers may be left vulnerable to financial losses and legal action, which can seriously impact their business and reputation.

What Type Of Insurance Do Bookkeepers Need?

There are some fundamental bookkeeping insurance policies for firm that can keep it protected. Here are some of the most important coverages you can purchase:

General Liability Insurance: Let's say you visit a client's office to do some bookkeeping work, and you accidentally spill hot coffee on the client's laptop, damaging it beyond repair. Apart from protecting you from financial losses due to high costs involved in settlements, general liability insurance can also protect your reputation.

This type of bookkeeping insurance will also protect you against 'slip-and-fall' accidents that can occur in your office or on your premises.

Professional Liability Insurance: This is one of the most important coverages for bookkeepers. A bookkeeper's job involves recording financial transactions that a small business performs from day to day.

Such an activity exposes you to human errors such as journal entry errors. Even if you've not made an error, you might still be sued for negligence - but fortunately, professional liability insurance will protect you against such a claim.

Property Insurance: In general, property insurance will protect a business and business owner from the costs of damage to property as a result of incidents such as fire, theft or weather destruction. Whether you own a building that is housing your bookkeeping office, or you rent an office, you need property insurance to protect your company's assets from events that are beyond your control.

Apart from being expensive to repair, property damage can be devastating in other ways, such as disrupting your business and making you lose clients.

Business Income Coverage: On top of general liability and property insurance, you can also purchase business income coverage. This will protect you against loss of income in case you're unable to run your business as a result of property damage due to an unexpected occurrence.

For instance, a storm might force you to close your business for several days while you try to salvage and repair your premises. With business income coverage, you can be covered to meet your financial obligations.

Data Breach Coverage: Bookkeepers store a lot of sensitive information, which could be lost or stolen. When this happens, your business could face penalties, regulatory fines, and a tarnished reputation. Keep in mind that data breach isn't confined to big business and hacking is not the only manner in which a business can lose data.

For instance, a thief may break into an employee's car and steal a laptop which contains your clients' personal information. Your offices may be broken into before thieves disappear with sensitive information. You therefore need bookkeeping insurance coverage to protect you against data breaches.

Employee Dishonesty Coverage: As a financial professional, you deal with a lot of sensitive financial information. This means that if an employee is dishonest and steals some records, it could pose huge risks to your company.

For example, an employee can use access a client's record and use the sensitive and valuable information to steal some money or shares. And employee could also enter ghost vendors into your system and start cutting checks payable to the fictitious vendor. You therefore need employee dishonesty coverage to protect you from an employee's fraudulent acts.

Workers Compensation Insurance: You need workers' compensation insurance if your business has any non-owner employees. workers comp covers you against employees' medical care in case they are injured at work. This coverage also takes care of sick workers as well as their income while they are recovering. Also, most states require workers comp and will impose fines or jail time for employers who fail to buy such coverage.

What Are Bookkeepers Risks & Exposures

Woman Doing Bookkeeping

Professional liability exposure is extensive. Working with individual clients presents fewer professional exposures than working with corporate clients. The exposure increases if the firm fails to conduct thorough background checks to verify employees' credentials and education, if clerical workers are allowed to do tasks that only professionals should handle, or if error checking procedures are ignored or are inadequate. Very serious losses may result from failure to document decisions and actions or to secure client approval.

Premises liability exposure is often minimal since most client contact is done electronically or by mail. If clients visit the premises, they must be confined to designated areas so that they cannot view or overhear conversations regarding other clients' confidential information. To prevent slips, trips, or falls, all areas accessible to clients must be well maintained with floor covering in good condition.

The number of exits must be sufficient, and be well marked, with backup lighting in case of power failure. Parking lots and sidewalks need to be in good repair with snow and ice removed, and generally level and free of exposure to slips and falls. Off-premises exposures arise from sales visits, training sessions, and physical audits at the customer's premises. There should be policies and training as to off-site conduct by employees.

Workers compensation exposure is generally limited to that of an office. Because work is done on computers, potential injuries include eyestrain, neck strain, carpal tunnel syndrome, and similar cumulative trauma injuries that can be addressed through ergonomically designed workstations. Some accounting firms have significant off-site work for audits, training and similar activities. Workers can be injured by slips and falls at clients' premises or in automobile accidents.

Property exposure is generally limited to that of an office, although there may be some incidental storage or an area for meetings. Ignition sources include electrical wiring, heating and air conditioning systems, wear, and overheating of equipment. Computers and other electronic equipment may be targets for theft.

Crime exposure comes from employee dishonesty, which can be quite serious as accountants and their staff have access to clients' financial information such as bank records and investment accounts. Potential for theft, directly or by means of identity theft, is great. Hazards increase without proper background checks, along with monitoring procedures and securing of all records to prevent unauthorized access.

All job duties, such as ordering, billing and disbursing should be separate and reconciled on a regular basis. Receipts should be issued for any cash payments received. Bank deposits should be made on a timely basis to limit the buildup of cash on premises. Audits should be performed at least annually.

Inland marine exposures are from accounts receivable if the firm offers credit, computers and valuable papers and records for customers' information, which may be originals that are difficult to re-create. Power failure and power surges are potentially severe hazards. A morale hazard may be indicated if the insured does not keep valuable papers and disks in fireproof file cabinets to protect them from smoke, water and fire. Duplicates should be kept off site to allow for re-creation in the event of a loss.

Business auto exposure is generally limited to hired and non-owned. If vehicles are provided to employees, there should be written procedures regarding personal use by employees and their family members. All drivers must have appropriate licenses and acceptable MVRs. Vehicles must be maintained and records kept in a central location.

What Does Bookkeeping Insurance Cover & Pay For?

Bookkeeping Insurance Claim Form

Bookkeepers can be sued for a variety of reasons, including:

Errors or omissions in financial statements: If a bookkeeper makes a mistake or omission in a company's financial statements, it can lead to financial losses for the company and its stakeholders. This can result in a lawsuit against the bookkeeper.

Fraud or embezzlement: Bookkeepers who engage in fraudulent activities such as embezzlement or falsifying financial records can be sued for their actions.

Breach of contract: Bookkeepers may be sued for breaching their contractual obligations, such as failing to provide services as agreed or providing inaccurate financial statements.

Negligence: Bookkeepers can be sued for negligence if they fail to exercise reasonable care in performing their duties, resulting in financial losses for the company and its stakeholders.

Insurance can protect bookkeepers from lawsuits by providing coverage for legal fees and damages. Here are some examples of how insurance can help pay for a lawsuit:

  • Professional Liability Insurance: This type of insurance, also known as Errors and Omissions (E&O) insurance, covers bookkeepers in case they make a mistake or omission in their work. If a bookkeeper is sued for errors or omissions in financial statements, their professional liability insurance can help pay for legal fees and damages.
  • Crime Insurance: This type of insurance can provide coverage if a bookkeeper is sued for fraud or embezzlement. If a bookkeeper steals money or engages in fraudulent activities, crime insurance can help pay for legal fees and restitution.
  • General Liability Insurance: This type of insurance can provide coverage for lawsuits related to property damage or bodily injury. For example, if a bookkeeper accidentally damages a client's property, general liability insurance can help pay for legal fees and damages.
  • Cyber Liability Insurance: Bookkeepers who store financial information electronically may be sued if their systems are hacked or breached. Cyber liability insurance can provide coverage for lawsuits related to data breaches and cyber attacks.

In summary, insurance can help protect bookkeepers from lawsuits by providing coverage for legal fees and damages. Different types of insurance can help cover different types of lawsuits, depending on the nature of the claim.

Commercial Insurance And Business Industry Classification


Description for 8721: Accounting, Auditing, and Bookkeeping Services

Division I: Services | Major Group 87: Engineering, Accounting, Research, Management, And Related Services | Industry Group 872: Accounting, Auditing, And Bookkeeping Services

8721 Accounting, Auditing, and Bookkeeping Services: Establishments primarily engaged in furnishing accounting, bookkeeping, and related auditing services. These establishments may use data processing and tabulating techniques as part of providing their services. However, establishments primarily engaged in providing data processing and tabulating services are classified in Industry 7374. Establishments providing income tax return preparation service without also furnishing accounting, auditing, or bookkeeping services are classified in Industry 7291.

  • Accounting service
  • Auditing service, accounts
  • Bookkeeping and billing service
  • Certified public accountants (CPAs)
  • Payroll accounting service
  • Public accountants certified

Bookkeeping Insurance - The Bottom Line

These are just some of the policies available as part of bookkeeping insurance and if you need coverage, you should speak to a professional broker to help you with a customized insurance package.

Additional Resources For Professional Services Insurance

Get informed about small business professional services insurance, including Professional liability, aka errors and omissions (E&O insurance), that protects your business against claims that a professional service you provided caused your client financial loss.


Professional Services Insurance

The professional services industry, which includes occupations such as lawyers, doctors, accountants, and architects, often deals with sensitive and complex issues that carry a high risk of liability. These professionals are expected to provide their clients with expert advice and guidance, and any mistakes or oversights can result in significant financial consequences for both the client and the professional. This is where insurance comes into play.

Business insurance provides protection against the financial repercussions of potential mistakes or accidents that may occur while providing professional services. For example, a lawyer may make an error in their legal representation that leads to a financial loss for their client. Without insurance, the lawyer would be personally responsible for covering the cost of this loss. Insurance helps to protect professionals from these types of financial burdens and allows them to focus on providing high-quality services to their clients.

In addition to protecting against financial losses, commercial insurance can also provide legal defense for professionals facing legal action as a result of their work. This can be especially important for professionals in high-stress or high-risk fields, such as doctors or architects, who may be at a higher risk of being sued for professional negligence.

Overall, the professional services industry needs insurance to protect against financial losses and legal action, ensuring that professionals can continue to provide high-quality services to their clients without the added stress and burden of potential financial consequences.

Minimum recommended small business insurance coverage: Business Personal Property, Employee Dishonesty, Accounts Receivable, Computers, Valuable Papers and Records, General Liability, Employee Benefits Liability, Professional Liability, Umbrella Liability, Hired and Non-owned Auto Liability & Workers Compensation.

Other commercial insurance policies to consider: Building, Business Income with Extra Expense, Earthquake, Equipment Breakdown, Flood, Computer Fraud, Forgery, Money and Securities, Special Floater, Cyber Liability, Employment-related Practices Liability, Business Auto Liability and Physical Damage and Stop Gap Liability.


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