Business Insurance Requirements for Tax Preparers in California

As a tax preparer in California, no matter whether you set up shop in San Diego or Silicon Valley, you need business insurance to protect yourself. In some cases, you may even be required to carry coverage.

For example, the state of California requires you to purchase workers’ compensation insurance if you have even one employee. If you rent your office, your lease will often require you to have general liability insurance. To cover mistakes that may happen in your day-to-day work, you’ll need professional liability insurance.

Insureon makes shopping for business insurance easy with industry-leading technology that gathers quotes from top U.S. carriers. Find out which policies are most common for tax preparers in California, and start an application to get your free quotes today.

Find the right insurance policy for your tax preparation firm

Common policies for California-certified tax preparers depend on a number of factors, including revenue, client contracts, and partnerships. The table below illustrates which policies might work best for your business structure.


Business type General liability / BOP Professional liability Workers' comp Cyber liability
Sole proprietor X X   X
Partner X X   X
Contractor / freelancer X X   X
Employer X X X X


General liability insurance: General liability insurance is the foundation of a tax preparer’s business protection, with coverage that extends to bodily injury, client property damage, advertising injury, and the cost of legal defense. Most commercial leases require you to have this coverage.

Business owner's policy (BOP): Tax preparers sometimes qualify for a business owner’s policy. This package helps your business save money by bundling commercial property insurance with general liability coverage at an affordable rate.

Professional liability insurance: Many clients require proof of professional liability insurance before entering contracts for professional services. This policy, also called errors and omissions insurance, can help cover legal expenses if you’re sued for unsatisfactory work or a business discrepancy.

Cyber liability insurance: Also called cyber risk insurance, this policy protects small businesses from expenses related to data breaches. If your business mishandles a client’s electronic information, you’re responsible for more than just legal fees; you might also be required to provide credit-monitoring services, in addition to informing your client of the breach and conducting damage control.

California workers’ compensation insurance: Any business that employs workers in California must purchase workers’ comp coverage for their employees. Workers’ comp can pay for lost wages and medical expenses if an employee is injured at work. If you are a sole proprietor, you aren’t required to purchase coverage for yourself, but it’s something you still may want to consider. Otherwise, a work injury could force you to take time off work, pay for your own medical expenses, and lose income.

Business insurance costs for tax preparers in California

According to data gathered from Insureon applications, tax preparers in California spend a little more than the national median cost on their insurance. The median annual cost for general liability coverage for California tax preparers is $775, while a business owner’s policy costs about $1,000, which is a little over $100 higher than the national median. The median cost of workers’ compensation insurance for California tax preparers is $962, which is about $300 more than the national media. However, California tax preparers tend to pay less than the national median for errors and omissions coverage, with a median annual cost of $560.

Median Business Insurance Costs for California Tax Preparers

Save time and money with Insureon

Insureon’s industry-leading technology helps tax preparers in California save time and money shopping for insurance by comparing policies from dozens of top U.S. carriers. Simply apply online and review quotes for the policies that best fit your business needs. Our insurance specialists are licensed in California and can answer your questions as you consider coverage.

To make the application go even quicker, have this information ready:

  • Workforce details, such as the number and types of employees.
  • Current and projected revenue.
  • Business partnerships.
  • Insurance history and prior claims.
  • Commercial lease insurance requirements.

Apply for free tax preparer insurance quotes today.