Tax season is busy enough without worrying about cyber threats–but protecting your clients’ sensitive information is just as important as filing their returns. A single cyberattack could lead to stolen data, legal trouble, and financial losses that could put your business at risk.
Cyber liability insurance is your safety net, covering the unexpected costs of data breaches, ransomware attacks, and downtime. Let’s explore what it is, why it matters, and how the right coverage keeps your tax business secure.
Cyber liability insurance protects businesses from the financial fallout of cyberattacks and data breaches. In 2025, nearly every business relies on technology—especially tax professionals handling confidential financial data.
Ask yourself:
If you answered yes to any of these, you face cyber risks. Yet, you may be thinking, “Insurance is too expensive,” or “I can protect myself with good security – I don’t need insurance.”
But here’s the reality check: If you can’t afford insurance, you can’t afford an incident.
A single cyberattack could cost hundreds of thousands or even millions. The average small business data breach costs $2.98 million, and with 4,000+ cyberattacks happening daily, it’s not a question of if but when.
Cyber insurance ensures a cyberattack won’t shut you down. How? Let’s take a look at what it covers to see how a comprehensive policy keeps you operational in the face of an incident.
How data breaches affect small businesses. Business News Daily.
A cyber incident can result in costly data leaks, reputational damage, and operational downtime. Here’s how cyber liability insurance can mitigate those effects.
Covers the cost of recovering and replacing lost data, provides a year of credit monitoring and monitoring for identity theft, and provides crisis management services.
Also referred to as cyber extortion, cyber insurance covers payments made to hackers and any costs related to investigating the incident.
Covers any costs associated with downtime due to an incident, including lost income and expenses related to getting your business operational again.
Covers the cost of replacing or recovering data that has been lost or corrupted due to a data leak, human error, or malware.
One of the most crucial parts of handling a cyber attack is notifying customers swiftly and reassuring them that you’re handling the incident and that their data will remain safe in the future. It isn’t uncommon for businesses to lose customers after a cyber attack, and reputation management handled by crisis PR can be critical to ensuring continued trust from your customers.
Covers any legal fees, settlements, or judgments related to data breaches or failure to protect sensitive customer information. All cyber incidents must be reported to the Federal Trade Commission (FTC), and you may have to pay fines if they find you non-compliant with their cyber security requirements. Insurance covers the cost of these fines.
Cyber liability can sometimes include further protections for risk associated with using AI in business operations. It can also include coverage for detailed investigation into any incident and coverage for network security liability, which is the risk that your technology could be used to attack others.
While cyber liability coverage is comprehensive, there are some limitations. Most policies won’t cover:
Every policy is different, so always check with a CoverHound insurance agent to confirm the extent of your coverage.
CoverHound provides cyber liability coverage for tax professionals, including:
We also serve professionals in service and office-based industries, like health professionals, lawn care and landscaping professionals, contractors, consultants, and IT professionals.
As a tax professional, you handle some of the most sensitive client data, from Social Security numbers to financial statements. If that data falls into the wrong hands, it could result in identity theft and fraud risks for your clients, lawsuits that drain your finances, and lost customer trust, leading to long-term revenue loss.
With coverage from one of CoverHound’s A+ rated carriers, you can focus on your clients, knowing that if a cyberattack happens, you’re protected.
Most tax businesses aren't legally required to have cyber insurance to operate, but many may find themselves with a client who asks them to get a policy to move forward with work or asks for proof of insurance. The CoverHound opinion? All businesses should have cyber insurance to protect themselves from potential cyberattacks.
The average annual cost of cyber insurance for a business ranges between $500 to $5000 a year. Costs will depend on factors like # of employees, gross revenue, and cyber risk exposure.
Taking your own security measures is an excellent step in addition to a robust insurance policy. We recommend having multi-factor authentication in place, all data backed up, changing passwords frequently, using a VPN, and implementing any other security measures where possible.
Cyber liability insurance is an investment in the long-term success of your tax business. With a policy tailored to your businesses’ needs, you can help people prepare and file for years to come and weather cyber threats with ease.
CoverHound makes it easy to compare quotes from 50+ carriers so you can find the right coverage at the best price. Get your free, customized insurance quote in less than five minutes when you take our online quiz today.
Insurance shopping simplified
Insurance shopping simplified
