Bookkeeping insurance

Do bookkeepers need insurance? Without a doubt you need insurance if you are bookkeeper.

bookkeeping insurance

There is a limit to what you can do for some clients. You also rely on their records to do your work. Additionally, if you make a mistake, you don’t want to be sued out of existence.

What are some typical bookkeeping services?

Why you might get sued

There are several reasons that a bookkeeper might get sued. You might get sued because you work with a trouble or difficult client. You might get sued because you have inadequate bookkeeping knowledge. This could mean that you presented yourself as a bookkeeper when you actually had no knowledge. Your client can also allege this if they think you had no idea what you were doing. Maybe you entered information incorrectly, etc. You might have inadequate documentation. A client would sue you if a bank or government agency requested support, and you couldn’t support it with documentation. You might also miss financial or regulatory deadlines that cause the client loss. You could also be sued if you commit fraud or are alleged to have committed fraud.

There are a couple choices that you have when it comes to bookkeeping insurance

Insurance for bookkeeping business

E&O insurance for bookkeepers

Many bookkeepers first look to errors and omissions insurance or e&o insurance. This is the main thing that insurance companies market to bookkeepers and accountants. This will provide coverage if you make a mistake while performing your bookkeeping service. E&O policies typically cover judgments against you, settlements, court costs, lawyer fees and administrative costs related to your lawsuit. The typical bookkeeping insurance policy is for a $1,000,000 limit, but make sure you discuss the policy with your insurance broker.

You will need this type of insurance to protect your from messing up on reconciliations, filing tax returns and other things that might cost your client a lot of money if you screw up.

Employee dishonesty policy

If you are going to have any employees in your bookkeeping business, then you should probably also get employee dishonesty policy. Bookkeeping involves money and financial interests. Any time money is involved, there is a possibility for fraud. You don’t want to be held fully responsible for something terrible that your employee does. Try to make sure the policy covers negligence related to taxes and payroll.

Contract performance bond

This is a type of surety bond. People also refer to this as being a bonded bookkeeper.

These bonds guarantee that a contract is performed according to its terms and conditions. If it isn’t completed according to the terms and conditions, your clients could come after the bond.


If you don’t want to pay premiums and never see that money again, then you can self insure. You have to save more than you would pay in premiums in most cases because the insurance company spreads risk across multiple policyholders. You have to remember that people like to sue though. This is especially going to be true if one of your clients goes out of business. Either the client or third parties will sue you.

You should save for the claim amount and any damages that you might have to pay in court.

General Liability Insurance & Business Owners Policy Insurance

If you are using office space, then you might also need these types of insurance. General liability insurance protects you against claims from other people on your business and business owners policy insurance protects you if something happens to your work product.