How Much Does Tax Preparer Insurance Cost? 2025 Rates

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 business insurance 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.

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

Errors And Omissions Insurance

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

E&O insurance protects tax professionals if a client claims that a mistake, missing information, or incorrect filing caused financial loss. This can include incorrect deductions, missed credits, filing delays, or inaccurate tax guidance.

For example, if a preparer forgets to include a major deduction and the client ends up paying more in taxes, the client could pursue reimbursement. E&O coverage helps pay legal fees, settlements, and the cost of correcting the return.

Typical policy limits are $250,000 per occurrence.

Here is a look at average annual premiums in 10 states:

Note: Estimates reflect typical annual E&O premiums for tax preparers based on market-average agency pricing; actual premiums will vary with firm size, revenue, services offered, claims history, and state regulations.

Cyber Insurance

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

Tax preparers work with highly sensitive client information such as Social Security numbers, account details, and income documents. Cyber insurance helps cover expenses related to data breaches, stolen information, ransomware, and system hacks.

For example, if a cybercriminal accesses your tax software and downloads client financial data, cyber insurance helps pay for legal costs, IT security recovery, client notification, monitoring services, and regulatory penalties.

Median policy limits are $1 million.

Here are average annual premiums across 10 states:

Note: Estimates reflect typical annual cyber/privacy liability premiums for tax preparer practices across a mix of agencies; actual premiums will vary with revenue, client data volume, security controls, claims history, and coverage limits.

General Liability Insurance

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

This coverage protects against claims involving bodily injuries, property damage, or advertising-related issues. For instance, if a client slips in your office and suffers an injury, general liability can help pay for medical costs and legal representation.

Typical policy limits are $1 million per occurrence.

Costs vary based on business size, location, foot traffic, service offerings, past claims, and whether additional insured endorsements are needed.

Here are typical annual premiums by state:

Note: Estimates are based on market-average annual general liability premiums for tax preparer practices; actual premiums will vary with location, firm size, services offered, claims history, and coverage limits.

Workers’ Compensation Insurance

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

Workers’ comp helps cover medical expenses, rehabilitation, and partial wages if an employee is injured at work. For example, if a staff member strains their back lifting office equipment, this policy helps cover treatment and income replacement.

Coverage rules are set by each state, and policies typically include medical benefits and wage replacement.

Here are average annual premiums for 10 states:

Note: Estimates reflect typical annual workers’ compensation premiums for tax preparer practices across a mix of agencies; actual premiums will vary with payroll size, employee classifications, claims history, and state-specific rules.

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.

Here’s a look at the average annual premiums for 10 different states:

Note: Estimates are based on typical annual fidelity bond and small-business bonding costs across agency markets; actual premiums will vary with bond amount, employee exposure, credit, and underwriting factors

Tax Preparer Business Insurance Costs By Provider

Tax preparer business insurance costs will vary greatly depending on the insurance carrier. Use the table below to find average costs across different providers.

Note: Estimates are based on typical annual premiums for tax preparer businesses; actual premiums will vary by location, services, revenue, claims history, and coverage limits

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.

Size of Your Tax Preparation Business

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.

Types of Tax 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. Adding services like SEC work or financial planning will necessitate higher coverage limits.

Location of Your Business

Where the business is located matters. Areas with higher rates of lawsuits or more expensive legal systems often have higher insurance costs. Tax preparers in some jurisdictions might have more complex state tax codes that lead to higher professional liability insurance costs.

Payroll

Larger firms with higher payroll and more employees face higher risk, especially if those employees include bookkeepers, CPA’s, and other specialists.

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. So if you have ongoing certifications to demonstrate your professionalism, you might be able to trigger lower premiums.

Claims History

If a tax preparer has made past insurance claims, especially for mistakes or legal issues, their insurance rates may go up. A history of tax errors, audit problems, or missed deadlines can trigger higher premiums for an additional five years. A clean record can help keep premiums lower.