What Is CPA Professional Liability Insurance?

CPA professional liability insurance — also known as Errors & Omissions (E&O) insurance — protects accountants against claims of negligent professional services. If a client alleges that your work caused them financial harm, E&O coverage pays for your legal defense and any resulting settlements or judgments.

For CPAs, common claims include:

Tax preparation errors that result in IRS penalties or missed deductions
Missed filing deadlines that trigger late fees or lost refund opportunities
Audit mistakes in financial statements that mislead investors or lenders
Incorrect financial advice that leads to poor business decisions
Failure to detect fraud during an audit engagement

E&O insurance for CPA firms typically costs $1,200–$4,000 per year depending on firm size, services offered, revenue, and claims history.

Why Every CPA Needs E&O Insurance

Even the most careful accountant can face a claim. Consider these scenarios:

A tax return error triggers an IRS audit and $50,000 in penalties — your client sues you for the amount plus legal costs
You miss a deadline for filing a corporate extension — the client incurs late fees and blames your firm
An audit opinion misses a material misstatement — investors lose money and allege negligence
A client follows your tax planning advice and later discovers it created an unintended liability

Without E&O insurance, you would pay legal defense costs out of pocket — even if the claim is frivolous. Defense costs alone can exceed $50,000, and settlements often reach six figures.

→ Compare CPA E&O insurance quotes from top carriers

Bundle E&O with Cyber for Complete Protection

Modern CPA practices face both professional liability and cyber risks — and the two often overlap. A phishing attack that compromises your email could lead to both a data breach (cyber claim) and a missed deadline (E&O claim).

Bundling E&O and cyber insurance provides:

10–20% premium savings vs. purchasing separately
No coverage gaps between policies
Single deductible for incidents that trigger both coverages
Streamlined claims process with one carrier

Hartford and Chubb both offer purpose-built E&O + cyber bundles for accounting professionals.

Top Carriers for CPA Professional Liability

Hartford: Competitive rates for firms under $5M revenue, strong claims handling, excellent bundle options with cyber and BOP
Chubb: Premium E&O coverage with higher limits, dedicated accounting industry underwriters, risk management resources
Hiscox: Streamlined online process for solo CPAs and small firms, quick quotes, competitive rates
Cowbell: Innovative bundled policies with AI-powered risk assessment

→ See what your CPA firm would pay for E&O coverage

CPA E&O Insurance Cost Guide

Firm Profile	Typical Annual Premium
Solo CPA (tax prep only)	$1,200–$2,000/yr
Solo CPA (tax + advisory)	$1,800–$2,800/yr
Small firm, 2–5 CPAs	$2,500–$4,000/yr
Mid-size firm, 6–15 CPAs	$4,000–$8,000/yr
Firm with audit services	+20–40% premium
E&O + Cyber bundle	Save 10–20%

Key factors: services performed (audit work costs more), annual revenue, number of clients, claims history, and whether you offer advisory or consulting services.

What CPA E&O Insurance Covers

Legal defense costs: Attorney fees, court costs, and expert witnesses — even for groundless claims
Settlements and judgments: Amounts you are legally obligated to pay a client
Disciplinary proceedings: Defense costs if a state board of accountancy investigates your work
Subpoena assistance: Costs associated with responding to subpoenas related to your professional work
Prior acts coverage: Claims arising from work performed before the policy inception date (if selected)

→ Get your free CPA E&O insurance quote in 60 seconds