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Professional Services
Professional liability sized to your CPA body's minimum and to the work you actually do.
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An accountant in Canada needs professional liability (E&O) first. CPA firms in public practice must carry it, and in Alberta, British Columbia and Nova Scotia the minimum runs from $1 million to $2 million per claim depending on firm size, with six years of cover after you stop practising. Add cyber and privacy breach cover for client tax and banking data, crime cover for client funds, general liability and an office package.
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Accountants carry a liability that outlasts the file. An audit relied on by a lender, a missed election or a valuation used in a sale can become a claim years later, measured in someone else's money. In public practice, your CPA body also requires professional liability insurance and, in the provinces we have checked, six years of cover after you stop practising.
We build accounting programs around your fee mix: E&O that meets your CPA body's minimum and your clients' contracts, cyber for the tax and banking data you hold, crime cover for client funds, general liability and an office package. We also work with bookkeepers and tax preparers, whose risks differ from a CPA firm's.
An accounting practice sells judgement and handles other people's money and data. Almost every serious claim against it is a financial loss, not an injury, so the program is built around professional liability (E&O). The rest of the program closes the gaps E&O leaves. This page sits under our wider business and professional services guide, which covers the sector as a whole.
| Coverage | What it answers | Why accountants need it |
|---|---|---|
| Professional liability (E&O) | A client or third party says your error, omission or negligent advice cost them money | Mandatory for public practice in the provinces we checked, and the policy most accounting claims land on |
| Cyber and privacy breach | Ransomware, a hacked mailbox, stolen client files, breach notification | You hold SINs, tax slips, payroll registers and banking details for every client |
| Commercial crime | Employee theft, funds transfer fraud, social engineering, theft from clients | Staff with signing authority or online banking access to client accounts |
| Commercial general liability | Bodily injury and property damage to others | Clients visit your office and staff work at client premises; leases demand it |
| Office package | Computers, records, furniture, leasehold improvements and business interruption | A fire or flood at tax time stops billing when it matters most |
| Directors' and officers' liability | Claims about management decisions, including outside board seats | Partners who sit on client or charity boards are rarely covered by firm E&O |
Underwriters split an accounting firm's fees by service, because each service line produces a different kind of claim and a different number of potential claimants. Ontario's Public Accounting Act, 2004 draws the key line. It defines public accounting as assurance engagements, including audits and reviews, and compilations, where it can reasonably be expected that a third party will rely on or use the work. A compilation carrying the prescribed notice is excluded. That third-party reliance is exactly what widens an accountant's liability.
| Service line | Who can claim | Typical allegation |
|---|---|---|
| Audit and review engagements | The client, plus lenders, investors, purchasers and others who relied on the statements | Failure to detect misstatement or fraud; an opinion that should have been qualified |
| Compilation engagements | Mostly the client; third parties if they relied on the statements | Errors in the statements, or a missing notice that leaves the work looking like assurance |
| Personal and corporate tax | The client and, for estates, the beneficiaries | Missed deadlines and elections, wrong figures, penalties and interest charged to the client |
| Advisory, valuation and transactions | The client, buyers and sellers, shareholders in a dispute | Advice that led to a bad deal, an overstated valuation, a restructuring that triggered tax |
| Bookkeeping and payroll services | The client and, through them, its directors | Late or missed source deduction and GST/HST remittances; see our bookkeeper insurance page |
Firms that do mainly personal returns face high volume and low severity. Our tax preparer insurance page covers that model. Firms with audit clients carry the long tail and the largest claims, because the people who rely on audited statements are not your clients and are not bound by your engagement letter.
The scenarios below are hypothetical, built from the kinds of allegations accounting firms commonly face. They show which policy responds and where the gaps sit.
| Hypothetical scenario | What the claimant alleges | Policy that responds |
|---|---|---|
| A missed deadline on a client's corporate election triggers tax the client could have avoided | Negligence in tax advice and filing | E&O, for defence and the client's provable loss |
| A lender advances funds on reviewed statements; the borrower later fails and the inventory proves overstated | Negligent review; the lender relied on the report | E&O, subject to the engagement terms and limitation defences |
| A partner's email is compromised and a fake message redirects a client's payment to a fraudster | The firm's system enabled the fraud | Cyber for the breach response; crime or E&O for the loss, depending on wording |
| A staff member with online banking access diverts money from a client's account | Theft by the firm's employee | Crime with third-party (client property) cover; not standard E&O |
| Ransomware encrypts the file server in March | Lost billing time; clients' data possibly exposed | Cyber for restoration, notification and business income |
| A client trips on a loose mat in the reception area | Bodily injury on your premises | CGL |
Each provincial CPA body sets its own insurance rules for public practice. We have read the requirements for four provinces and set them out below. For the other provinces we serve, check with your CPA body before you renew. Note the measuring basis: Alberta and Nova Scotia state that defence costs are in addition to the limit, so a policy with defence inside the limit may not qualify.
| Province | Rule | Minimum limits and terms |
|---|---|---|
| Alberta | CPA Alberta requirements; CPA Bylaw 802 for closures | All registered professional accounting firms and professional service providers must carry PLI, even with no clients. $1,000,000 per incident for one registrant, $1,500,000 for two or three, $2,000,000 for four or more, excluding defence costs. LLPs: $2,000,000 or $2,500,000. A closing firm must keep at least $1,000,000 per incident for at least six years |
| British Columbia | CPABC Bylaw Regulation 1301 | Per authorized practising office: $1,000,000 per claim for one member with a proprietary interest, $1,500,000 for two or three, $2,000,000 for four or more. A licence holder not covered by a firm policy needs $1,000,000. Prior acts must be covered for at least six years after leaving public practice. The insurer must notify CPABC of cancellation or non-renewal |
| Nova Scotia | CPA Nova Scotia Professional Liability Insurance Requirements Policy (approved February 3, 2025) | $1,000,000, $1,500,000 or $2,000,000 per claim and in aggregate, by number of members, with defence costs in addition. Full prior acts cover required. Six-year discovery period after a firm stops practising. Applies even to voluntary or part-time work |
| Ontario | CPA Ontario, Regulation 14-1; Public Accounting Act, 2004 | Members engaged in public accounting must carry professional liability insurance that meets Regulation 14-1. A public accounting licence requires CPA Ontario membership. CPA Ontario provides limited no-cost coverage only for unpaid assurance work for small charities and not-for-profits with gross revenue up to $100,000. Check Regulation 14-1 with CPA Ontario for current limits |
The mandatory limit is a floor. A single audit client with outside lenders, or a transaction engagement, can justify excess E&O above it. Firms that also work in other provinces must meet each relevant CPA body's rule.
Accounting E&O is written on a claims-made basis. The policy in force when the claim is made pays, not the policy in force when you did the work. So a retroactive date reset by a new insurer, or a short lapse between policies, can strip cover from years of past files. Our professional liability guide explains the mechanics in full.
The CPA bodies we checked turn this into a rule. CPABC, CPA Alberta and CPA Nova Scotia all require cover for prior work for at least six years after a member or firm leaves public practice. Plan for it before you retire, sell your client list or merge. A successor firm can sometimes add the predecessor as a named insured, which Nova Scotia's policy expressly allows, but the arrangement has to be documented.
Many firms pay client bills, run client payroll or hold signing authority for estates and small companies. That access is valuable to clients and to fraudsters. If you hold money in trust, follow your CPA body's rules for trust funds and keep them in a separate account.
An accounting firm's server holds the most complete financial picture of every client: income, SINs, banking, investments and family details. Under the federal Personal Information Protection and Electronic Documents Act (PIPEDA), a breach of security safeguards that creates a real risk of significant harm must be reported to the Privacy Commissioner of Canada and to the affected individuals, and every breach must be recorded. Identity theft and financial loss are both listed forms of significant harm, so a breach of tax files will usually meet the test.
A cyber policy pays for forensics, breach counsel, notification, data restoration and lost income. Read the anatomy of a cyber claim for how the first days unfold. The controls that move a cyber premium are multi-factor authentication on email and remote access, offline backups and staff training on phishing.
Two exposures catch accountants out. The first is outside directorships. A partner who joins a client's or a charity's board takes on personal liability as a director, including for unremitted source deductions under section 227.1 of the Income Tax Act. Firm E&O usually covers professional services, not board duties, so ask for outside directorship cover or confirm the organization's D&O policy.
The second is penalties levied on you. Section 163.2 of the Income Tax Act lets the CRA penalize an adviser who makes, participates in, assents to or acquiesces in a false statement, where the adviser knew or would reasonably be expected to know but for culpable conduct. The preparer penalty is at least $1,000. Good faith reliance on client information is a defence. E&O policies generally exclude fines and penalties imposed on the insured, and culpable conduct sits outside cover. Legal expense insurance can help fund the dispute itself.
E&O premiums for accountants are driven by fee volume and fee mix. Underwriters ask for gross fees split between audit, review, compilation, tax, bookkeeping and advisory work, then look at the client base: public or listed entities, financial institutions, real estate, construction and U.S. clients all rate higher. The number of CPAs, years in practice, prior claims and circumstances, the limit, deductible and retroactive date complete the picture.
Cyber is rated on revenue, the number of client records you hold and your controls. Crime is rated on staff numbers, the funds you can reach and your payment controls. The office package is priced on contents values, the building and its protection. A sole practitioner doing compilations and personal tax sits at the low end of the market. A multi-partner firm with audit clients and transaction work sits at the high end.
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This page is general information, not insurance or legal advice. Coverage depends on your policy wording and the insurer. Speak with a licensed broker about your situation.
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