Bookkeeping insurance protects you from client financial loss claims, data breaches, equipment damage and staff-related risks, key cover for freelance bookkeepers and growing practices.
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Bookkeeping insurance protects you from the financial and legal risks that come with managing other people's financial records. Most bookkeepers carry professional indemnity insurance as standard, and plus add-ons for cyber liability, equipment, and public liability (depending on how you work and who you work with).
The specifics depend on your turnover, the services you offer, and what your clients or contracts require. Many clients, accountants, and online marketplaces won't engage a bookkeeper without proof of cover, and professional bodies like the ICB and AAT often recommend or mandate it for members.
But it’s not just a tick box. The right policy means you won't be personally liable if a client claims you made an error that cost them money. This protects your cash flow and your reputation.
As a bookkeeper, you're handling sensitive data, managing submissions to HMRC, and making decisions that affect your clients' compliance and cash flow.
Mistakes happen: a missed deadline, an incorrect VAT filing, a data breach, or a simple transcription error can trigger a claim that runs into thousands of pounds.
Bookkeeping professional indemnity (PI) insurance covers you if a client alleges negligence, error, omission, or breach of duty. It pays for your legal defence (even if the claim is unfounded) and any compensation awarded.
Essentially, anyone offering bookkeeping services should hold PI cover. That’s your baseline. What’s added on to that depends. For a freelance or sole trader bookkeeper, PI cover may be sufficient on its own.
However, if you employ people (even part-time or seasonally), you’re mandated to get employers' liability insurance. This covers compensation for employees who are injured or become ill because of their work.
Virtual or remote bookkeepers handling client data online need cyber cover alongside PI. Even in-house bookkeeping teams offering services to group entities may need cover if they're providing a professional service.
Many clients, accountants, and online bookkeeping marketplaces will ask for proof of PI before they'll engage you. Professional bodies like the Institute of Certified Bookkeepers (ICB) and the Association of Accounting Technicians (AAT) often recommend or mandate PI for members.
If you need to increase your PI limits to win a new contract, or if paying your annual premium upfront strains your cash flow, flexible funding from iwoca can help you cover the cost while keeping working capital free for software subscriptions, training, or staffing.
Without bookkeeping business insurance, you're personally liable for the full cost of any claim. That includes legal defence (which can cost tens of thousands even if you win) and compensation if you lose.
You also risk losing contracts. Many clients will terminate agreements if you can't provide proof of cover, and you'll be excluded from tenders that require PI as standard. For sole traders and small firms, a single uninsured claim can be financially catastrophic.
Insurance for a bookkeeping business typically includes several covers, though you can tailor a policy to match your risk profile (depending on whether you employ people).
Your core cover. It protects you if a client claims your work caused them financial loss due to negligence, error, omission, breach of duty, or confidentiality and data handling mistakes. This includes legal defence costs and any compensation awarded. Even if the claim is baseless, defending yourself is expensive – and PI covers that.
This covers third-party injury or property damage. If you visit client premises and trip over a cable, spill coffee on their laptop, or cause any accidental damage, this policy pays for repairs and legal costs. It's less critical for fully remote bookkeepers but essential if you meet clients face-to-face.
An increasingly important one as the profession has become almost fully digital. Bookkeepers handle sensitive financial data, often via cloud platforms and email.
Cyber cover protects against ransomware attacks, phishing incidents, client data breaches, and failures to follow PCI-DSS or UK GDPR. It pays for incident response, forensic investigation, notification costs, and claims from affected clients.
A legal requirement if you employ staff or assistants, even part-time. It covers claims from employees who are injured or become ill due to their work.
This protects laptops, scanners, portable devices, and other kit against theft, accidental damage, and loss. This applies whether you're working from home, at a client's office, or in transit. Consider worldwide coverage if you work remotely while travelling.
Pays for legal disputes unrelated to professional negligence (such as contract disputes or tax investigations). Covers losses caused by employee or contractor dishonesty (like theft or fraud).
Match your PI limits to your contract requirements and the size of your clients. Common bands are £100,000, £250,000, £500,000, and £1 million or more. Larger clients and more complex work (such as VAT or payroll services) typically require higher limits.
For cyber cover, choose limits that reflect the number of records you handle and your revenue exposure if client data is breached. Check your excess (what you'll pay towards each claim) and your retroactive date (how far back your cover extends for past work).
Bookkeeping insurance costs vary widely depending on your turnover, the services you offer, your claims history, and the cover limits you need.
As a rough guide, bookkeeping PI insurance can start from around £8 to £25 per month for low limits and simple bookkeeping-only services.
Add-ons like cyber liability, public liability, and equipment cover increase premiums, but bundling them with one insurer is often cheaper than buying separate policies.
Factors that might increase the cost of your premium include:
A tried and true way to reduce costs is by increasing your voluntary excess, bundling covers with one insurer, demonstrating good cyber hygiene (such as MFA, encrypted backups, and secure file sharing), and paying annually rather than monthly.
Paying annually is often cheaper overall, but it requires a lump sum upfront. If you'd rather preserve your cash flow for software subscriptions, training, or hiring an assistant, spreading the cost makes sense.
Using flexible finance lets you pay the annual premium while keeping cash free for the things that grow your business.
It’s definitely advisable. Even without employees, the minimum insurance you should carry is professional indemnity. Many clients require it in master service agreements (MSAs) or letters of appointment (LoAs). Without it, you'll struggle to win contracts.
If you visit clients at their premises, add public liability. If you carry laptops, tablets, or other portable kit, add an equipment cover. And if you handle client data online (which almost all bookkeepers do now), cyber cover is essential.
The good news is that insurance premiums are usually allowable business expenses for tax purposes. So you can offset the cost against your income.
Getting quotes is straightforward once you've gathered the right information. Insurers will ask for similar details, so it's worth having everything to hand before you start:
When comparing quotes, make sure you're comparing like for like:
Also assess the insurer or broker. Make sure they're FCA registered, check their claims handling service level agreements, and confirm they can provide documentation quickly for tenders and client onboarding.
Many providers issue instant certificates, which are useful if you need to onboard a new client quickly.
For standard risks, it can be as quick as the same day. Online quotes can produce immediate policy documents once you've paid. More complex profiles or higher PI limits may require underwriting, which can take a few days.
Annual insurance premiums are usually cheaper than monthly instalments. But paying upfront can strain your cash flow, especially if you're also investing in software, training, or hiring.
An iwoca small business loan gives you the flexibility to pay for insurance (and other business expenses) without tying up your working capital. You borrow what you need and only pay interest on the amount you've drawn down.
Once you've repaid some of the balance, you can draw again without reapplying. So you always have access to funds when you need them.
This means you can take advantage of lower annual insurance rates while keeping cash free for the things that matter: upgrading your software, CPD courses, or bringing on an assistant to help you take on more clients.
Ready to protect your bookkeeping business without sacrificing cash flow? Apply in minutes and see how much you could borrow with an iwoca loan.
