How Much Does Tax Preparer Insurance Cost? 2025 Rates

In 2025, U.S. tax preparers can expect to pay between $336 and $400 annually for business insurance, averaging $28 to $33 per month. The primary cost drivers are the types of services offered, your location, coverage limits, number of employees, experience, and credentials.

How Much Does Tax Preparer Insurance Cost?

The average tax preparer in the U.S. pays between $336 and $400 per year for business insurance. That breaks down to roughly $28 to $33 per month. However, this is just a ballpark range and actual costs can vary widely depending on your specific situation.

Just like every tax return is different, every tax preparer faces a unique set of risks, and that means insurance costs can vary widely. A single preparer working from home with a limited number of clients will generally pay far less than a multi-staff tax firm handling complex returns and offering additional financial services.

The scope of services you provide, the number of clients you serve, your professional credentials, and even your business location can all influence your insurance costs.

For example, tax preparers operating in areas with higher rates of lawsuits or regulatory scrutiny may face higher liability premiums.

Here are some of the biggest cost drivers:

• Number of employees (affects workers’ comp and liability)
• Type of services (affects overall risk)
• Property size and value (affects commercial property coverage)
• Past claims history (insurers charge more if you’ve filed claims)
• Business interruption coverage and other add-ons

Understanding these variables can help you better estimate your insurance needs and prepare for the real costs of protecting yourself in a tax preparer role.

Average Tax Preparer Insurance Costs For Coverage Types

When it comes to protecting yourself as a tax preparer, different types of insurance cover different risks. Understanding the average cost, coverage details, and what influences pricing for each policy type can help you build a more effective insurance plan. Here’s a closer look at the major coverages most tax preparers need.

• General liability insurance: $28 per month
• Errors and omissions insurance: $29 per month
• Cyber insurance: $60 per month
• Workers’ compensation insurance: $32 per month
• Fidelity bond: $79 per month

General Liability Insurance

The average cost of general liability insurance for a tax preparer is about $28 per month.

General liability covers third-party bodily injury, property damage, and advertising injuries. For example, if a client trips over a loose rug in the office and gets injured, this coverage can help pay for their medical expenses and any legal costs that may follow.

Typical policy limits are $1 million per occurrence.

Factors that impact cost include the size of the business, where it’s located, how many clients come in and out, any past insurance claims, and whether extra services, like audit support or financial advising, are offered, which can carry more risk.

Errors And Omissions Insurance

The average cost of errors and omissions insurance for a tax preparer is about $29 per month.

Errors and Omissions (E&O) insurance protects tax preparers if a client claims they made a mistake or left something out that caused financial loss. It covers things like errors on tax returns, missed deadlines, incorrect advice, or forgetting to include important financial information.

For example, if a tax preparer accidentally leaves out a major deduction and the client ends up owing more to the IRS, the client could sue for the mistake. E&O insurance would help cover the legal costs, any settlements, and even the expense of correcting the error.

This coverage is essential because even small mistakes can lead to serious financial consequences for both the client and the preparer.

Typical policy limits are $250,000 per occurrence.

Cyber Insurance

The average cost of cyber insurance for a tax preparer is about $60 per month.

Cyber insurance is important for tax preparers because they handle sensitive client information like Social Security numbers, bank details, and income records. If that data is stolen or hacked, it can lead to serious problems for both the client and the tax preparer.

Cyber insurance helps cover the costs of data breaches, including notifying clients, recovering lost data, hiring IT experts, and dealing with legal issues

For example, if a hacker breaks into a tax preparer’s computer system and steals client information, the preparer could be held responsible. Cyber insurance would help pay for credit monitoring for affected clients, legal fees, and the cost to secure the system.

Median policy limits are $1 million.

Workers’ Compensation Insurance

The average cost of workers’ compensation insurance for a tax preparer is around $32 per month.

For tax preparers who have employees, workers’ compensation insurance is essential. It helps cover medical expenses, rehabilitation, and lost wages if an employee gets injured while on the job.

For example, if an administrative assistant slips on a wet floor in the office and injures their back, workers’ comp would pay for their medical treatment and a portion of their lost income while they recover. This type of insurance protects both the employee and the business from the financial impact of workplace injuries.

Policy limits are regulated by each state, but typically include medical costs and a percentage of lost wages without a set cap.

Premiums are influenced by the size of your payroll, the type of work employees perform , your claims history, and any implemented safety programs.

Fidelity Bond

On average, a small tax preparer business pays about $79 per month,  for a fidelity bond. The main factor that affects the price is how much coverage the bond provides.

A fidelity bond is a type of insurance that protects a business if an employee steals money or valuable information. For tax preparers, this is especially important because they often handle sensitive client data and financial records. If an employee were to steal a client’s personal or financial information, a fidelity bond could help cover the losses and protect the business from financial damage.

What Factors Impact Your Tax Preparer Insurance Costs?

Tax preparer insurance premiums are carefully calculated by underwriters based on your business’s risk profile. Factors such as the range of services offered, the location of the office, the number of clients served, and any past claims history all play a role in determining the cost of coverage.

Business Size

The more clients or employees a tax preparer has, the more risk there is of something going wrong. Larger businesses usually pay more for insurance than small or solo practices.

Services Offered

If the tax preparer only files basic returns, their risk is lower. But if they offer extra services like bookkeeping, payroll, or IRS representation, the risk increases, so insurance costs more.

Location

Where the business is located matters. Areas with higher rates of lawsuits or more expensive legal systems often have higher insurance costs.

Experience And Credentials

Tax preparers with more experience or professional certifications (like CPA or EA) may be seen as lower risk and might pay less. Less experienced or uncertified preparers may pay more.

Claims History

If a tax preparer has made past insurance claims, especially for mistakes or legal issues, their insurance rates may go up. A clean record can help keep premiums lower.

How To Lower Your Tax Preparer Insurance Costs

Running a tax preparation business comes with its costs, but your insurance bill doesn’t have to be one of the biggest. While having the right coverage is essential, there are smart ways to lower your premiums without losing the protection you need.

Here are some practical tips tax preparers can use to reduce their insurance costs:

1. Bundle Your Policies

One of the easiest ways to save is by bundling multiple policies. Most insurers offer a Business Owner’s Policy (BOP) that combines general liability and property insurance at a lower rate than if you bought them separately.

If you also need workers’ compensation, bundling both through the same provider can lead to additional discounts. Not only does this simplify your paperwork, but it also makes your coverage more cost-efficient.

2. Ask About Discounts

Insurance companies often reward tax preparers that commit to a policy long-term. Ask your provider if they offer multi-year discounts for signing a two- or three-year agreement instead of renewing annually.

You might also qualify for lower rates if you pay your premium in full instead of in monthly installments.

3. Implement Safety Measures

Accidents in a tax office may seem unlikely, but they can still happen, and they can be expensive. Taking steps to keep your workspace safe shows insurance companies that you’re proactive, which can help lower your premiums.

For example, making sure your office has proper lighting, securing rugs or floor mats to prevent tripping, keeping client areas clean and organized, and ensuring your office chairs and desks are in good condition can all reduce the risk of injuries.

4. Create A Safe Working Environment

A strong safety plan can help tax preparers lower their workers’ compensation costs, especially if they have employees. This means training staff on how to work safely in the office, like proper lifting techniques when handling boxes of documents, setting up workstations to avoid strain or injury, using equipment correctly, and keeping walkways clear of hazards.

5. Adjust Your Deductible

Your deductible is the amount you pay out of pocket before insurance coverage kicks in. Choosing a higher deductible can significantly reduce your monthly premiums. Just make sure you can comfortably cover that amount if a claim arises.