Smart Insurance Strategies for Small Accounting Firms

Having the right insurance has become essential for small accounting firms in today’s rapidly evolving landscape. Here’s what to consider when planning and selecting coverage. Digital Exclusive – 2026

 

The risks small accounting firms face continue to multiply in today’s rapidly evolving business landscape.

Here, Matthew Richards, industry lead at Travelers, provides valuable insights into these risks and how insurance can help mitigate them. He outlines foundational and specialized insurance options, the ways in which to optimize coverage, and the value of partnering with knowledgeable insurance agents and carriers who can provide actionable insights and support.

What are the main risks facing small accounting practices today?

Richards: Small accounting firms face risks that are common to most small businesses, including office safety issues, cybersecurity threats, disaster preparedness, and employee-related risks—but they also have unique vulnerabilities that require specialized protection. That’s why it’s important that those working at the firm—certified public accountants (CPAs), accountants, tax preparers, and bookkeepers—stay up to date with certifications and regulations from state governing bodies, tap into educational and accreditation resources, and abide by local rules and regulations.

What foundational insurance should every accounting practice have?

Richards: Every accounting firm should have a business owner’s policy that provides:

• Comprehensive protection from liability claims, property protection, and coverage for business interruption losses.
• Workers’ compensation insurance, which covers medical expenses and lost wages for employees injured on the job.
• Commercial auto insurance, which provides protection for business vehicles (if employees use company-owned vehicles).
• An umbrella insurance policy, which provides extra liability coverage beyond existing policies.

What specialized insurance coverage do accounting firms need?

Richards: Firms should consider professional liability insurance, which protects against claims of mistakes or negligence in professional services. They should also consider employment practices liability coverage, which covers defense costs and damages related to employment-related claims.

Because accounting firms handle sensitive client data and often rely on third-party financial software, cyber liability insurance should also be top of mind. This insurance covers cyber extortion, business interruption, data restoration, and cybercrime.

According to the 2025 Travelers Risk Index survey, cyber threats remain a leading concern for U.S. businesses of all sizes and industries. In fact, the survey revealed that 75% of professional services firms recognize that having cybersecurity controls in place are critical, yet many firms lack essential protections. For example:

• 62% don’t have a post-breach response team.
• 54% don’t use endpoint detection and response tools.
• 51% lack an incident response plan.
• 38% don’t use multifactor authentication for remote access to their computer network.

Therefore, implementing proper safety systems and controls, along with educating employees on best practices, can significantly reduce the risk of cyber threats.

Accounting firms should also consider specialized coverage for disasters. Remember, all states are subject to adverse weather conditions and natural disasters that can negatively impact business operations and affect employees’ access to offices or systems. Creating a business continuity plan outlining what you’ll do in the case of a natural disaster—who you’ll call, how you’ll protect your practice, and how you’ll operate afterward—will make it easier to maintain normal business operations and support your clients. As part of your disaster planning and response efforts, be sure to contact your insurance agent or carrier for support. You can also tap into resources from local and national organizations specific to your industry and location, such as the IRS Disaster Relief Resource Center for Tax Professionals and the Illinois Emergency Management Agency.

How much will insurance cost to cover my accounting practice?

Richards: The cost of insurance for accounting practices depends on several factors, including location, claim history, number of employees, and more. A small practice with two or three employees in a rented space will have different needs than a practice with many accountants and administrative staff in an owner-occupied office space.

How can I optimize my insurance coverage while managing costs?

Richards: It’s best to take a strategic approach. One effective method is to bundle policies with a single carrier. By consolidating your business owner’s policy and other policies under one insurance provider, you can often save money and streamline the management of your insurance needs. Additionally, consider the scalability of your coverage. As your accounting firm grows, your insurance requirements will evolve. It’s crucial to select flexible and responsive coverage that can adapt to changes in your business size and scope. Implementing robust risk mitigation strategies, such as cybersecurity controls and workplace safety measures, can also help reduce premiums and minimize the likelihood of claims, ultimately saving your firm money in the long run.

What should I look for when choosing an insurance partner?

Richards: When choosing an insurance partner, it’s best to look for brokers and agents who:

• Have industry expertise and understand the specific needs of accounting businesses.
• Work with carriers that provide specific products and services tailored to the accounting industry.
• Offer comprehensive services that support not only basic claims management but also risk control education, loss consultation, and value-added services.

How should I prepare before meeting with an insurance agent?

Richards: Before meeting with an insurance agent, you should share pertinent information about your firm. This will allow the agent to better assess your needs and recommend the most appropriate coverage options. Such information may include:

• Financial reports on annual revenue and expenses.
• The number of employees in your firm.
• Your firm’s office locations and the types of services offered.
• Generic information about client types, sizes, and industries.
• Existing risk management procedures and claims history.

Overall, by proactively identifying risks and leveraging both foundational and specialized insurance solutions, your small accounting practice can better protect itself and support its long-term growth.