Key Takeaways
- General liability insurance protects your business from lawsuits over accidents and errors.
- Professional liability (E&O) insurance covers legal costs if clients sue over accounting mistakes.
- Property insurance protects office equipment, inventory and the building from hazards.
- Cyber insurance covers costs from data breaches and cyber attacks.
- Business interruption insurance replaces lost income if the office shuts down temporarily.
- Employment practices liability insurance protects against employee lawsuits.
Introduction
Accounting firms and bookkeepers handle sensitive client financial information and face various risks in their daily operations. Proper business insurance protects these businesses from costly lawsuits and ensures they can continue serving clients even after unexpected disruptions and property damage outside of their control. Several key types of coverage should be considered.
General Liability Insurance
General liability insurance provides important protection for accounting and bookkeeping businesses. It covers costs from lawsuits over accidental injuries, property damage, errors and omissions, as well as liability from data breaches. General liability insurance also protects against risks associated with their daily operations such as bodily injury or property damage claims from clients, lawsuits from errors and omissions in work, on-site accidents and injuries to visitors and employees, property damage to client materials or equipment, and claims if a client’s confidential financial information was leaked or lost.
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Based on industry data and average claims, the estimated annual pricing for general liability insurance for accounting businesses in NAICS code 541219 is around $1,500. This price was calculated based on average revenues of $500,000 and 5 employees. Larger accounting firms or those with riskier services may see higher rates.
Estimated Pricing: $1,500
Professional Liability Insurance
Professional liability insurance, also known as errors and omissions insurance or E&O insurance, provides critical coverage for businesses that provide professional or financial services like accounting firms. It protects them from costly lawsuits if a client claims losses due to negligence, errors or mistakes in the work. E&O insurance for accounting businesses specifically helps cover lawsuits, settlements and legal fees from issues such as incorrect tax filings, missed deadlines, faulty accounting work or bookkeeping mistakes. It also protects personal assets of owners and keeps the business operating if a claim arises.
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Based on typical factors that insurers consider such as revenue, number of employees, types of services provided, and loss history, the estimated average annual pricing for professional liability insurance for accounting firms in NAICS 541219 industry is around $2,000 – $4,000. The pricing is usually calculated as a percentage of revenue or per employee to determine the base premium which can then be adjusted up or down based on other qualifying factors.
Estimated Pricing: $2,000 – $4,000
Property Insurance
‘Property insurance provides important protection and peace of mind for accounting and other professional services businesses. It ensures they can continue operating even after unexpected property losses or damage outside of their control.’
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Based on industry averages, the estimated annual property insurance pricing for a business in the other accounting services industry with NAICS code 541219 is around $1,600. This was calculated based on factors such as average revenue, number of employees, property value, claims history, and risk level.
Estimated Pricing: $1,600
Cyber Insurance
Cyber insurance is an important risk management tool for accounting firms and businesses handling sensitive client data. It can help cover costs and reduce liability from cyber incidents like data breaches, ransomware attacks, technology errors and more. Additional benefits of cyber insurance include protecting firms from losses due to business interruptions, covering public relations costs during incidents, and lowering compliance expenses. Common uses of cyber insurance involve responding to data theft, paying ransom demands, addressing errors, and dealing with threats. Average annual premiums for accounting services firms are estimated to be between $3,000 to $5,000.
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After analyzing typical factors like annual revenue, number of employees, security protocols and compliance with industry standards, an estimated average annual cost for cyber insurance for businesses in the Other Accounting Services industry with NAICS code 541219 would be between $2,000 to $5,000. Pricing is usually determined based on a combination of number of client records that could potentially be breached and annual revenue.
Estimated Pricing: $3,000-$5,000
Business Interruption Insurance
Business interruption insurance provides protection for accounting firms and other professional service businesses to continue operating and serving clients if their office space or systems are damaged or disrupted due to events outside of their control. It covers lost income and ongoing expenses during rebuilding or repairs to help ensure business survival without significant interruption. Business interruption insurance replaces lost income and covers operating expenses if a business is forced to temporarily close due to covered causes of loss like fire, flooding or equipment damage. This protects cash flow and the long-term viability of the business. Business interruption insurance is critical for accounting firms and professional services businesses to withstand unforeseen events that disrupt operations and continue serving clients without significant interruption. It provides funds to cover lost income and ongoing costs during the period of repair or rebuild.
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Based on typical business interruption insurance pricing factors such as nature of business operations, revenue, payroll, location, claims history, etc. for businesses categorized under NAICS code 541219 (Other Accounting Services), the estimated average annual pricing would be around 2% of annual revenues. This price was estimated based on industry benchmarks and assumptions of an average accounting firm in NAICS 541219 having annual revenues of $500,000, 5 employees, and standard office risk class.
Estimated Pricing: $10,000
Directors And Officers Liability Insurance
Directors and officers liability insurance, also known as D&O insurance, provides essential protection for leadership and management of businesses in the accounting industry. D&O insurance shields directors and officers from costly litigation related to their duties oversightening the company while allowing them to focus on running the business. It also helps cover legal defense costs if directors or officers are sued, and can pay settlement costs or damage awards if a lawsuit is lost. Maintaining D&O coverage supports morale and recruitment of qualified directors and officers, while ensuring the company’s continued operations if a lawsuit causes financial pressures.
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Based on an analysis of typical pricing for D&O insurance for accounting businesses in NAICS code 541219 (Other Accounting Services), the average annual premium is around $2,500. This pricing is derived from taking into account factors like number of employees, annual revenue, risk profile, and claims history. Generally smaller accounting businesses with under 10 employees and less than $2 million in annual revenue would pay around this average $2,500 annual premium amount.
Estimated Pricing: $2,500
Employment Practices Liability Insurance
Employment practices liability insurance (EPLI) is an important policy for accounting firms and businesses to protect themselves from costly lawsuits related to employment issues.
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Based on typical pricing for small businesses in low risk professional services industries, the estimated average annual pricing for employment practices liability insurance for businesses in the Other Accounting Services industry (NAICS Code: 541219) would be around $1,500. This pricing estimate was derived based on number of employees (typically less than 10 for small businesses in this industry) and common premium calculation factors such as risk level, claims history, and coverage amounts.
Estimated Pricing: $1,500
Commercial Auto Insurance
“Commercial auto insurance offers important coverage for small accounting businesses that use vehicles as part of their work. This type of insurance helps protect the financial interests of the business and its employees in various scenarios involving vehicles used for business.”
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Based on national average pricing data for commercial auto insurance and considering factors such as the type of vehicles (sedans, vans), number of vehicles, driver characteristics, etc. of accounting businesses in NAICS 541219, the estimated average annual premium would be around $1,500 per vehicle. This pricing is derived from published insurance rate filings and historical loss data for this industry and occupation mix.
Estimated Pricing: $1,500
Conclusion
Maintaining adequate business insurance gives accounting professionals peace of mind to focus on helping their clients. The right policies can shield them from devastating financial losses in the event of lawsuits, cyber incidents, property damage and more. With a solid insurance plan in place, firms in this industry can withstand unforeseen events and challenges to keep their businesses running smoothly.