Which type of insurance would protect XYZ Accounting from the lawsuit Cliff is filing due to tax preparation errors?

Errors and Omissions Insurance, also known as E&O insurance, is specifically designed to protect businesses and professionals from claims related to negligence, mistakes, or failures in their professional services. In the scenario presented, where Cliff is filing a lawsuit against XYZ Accounting due to tax preparation errors, this type of insurance would cover the firm in the event that a claim is made for alleged errors or omissions in their tax services.

This type of coverage is vital for professions that provide advice or services, as it ensures that they are financially protected against claims of errors that could result in financial loss for their clients. In this case, since the lawsuit pertains to tax preparation errors, E&O insurance would provide the essential protection that XYZ Accounting needs to defend against the claims made by Cliff.

In contrast to E&O insurance, General Liability Insurance typically covers claims related to bodily injury or property damage caused by the business's operations, which does not apply here. Professional Liability Insurance often overlaps with E&O insurance but may vary in specific coverage depending on the industry. Commercial Property Insurance focuses on protecting the physical assets of a business but does not cover liability claims arising from the services provided to clients. Thus, E&O insurance is the most appropriate coverage for the issue at hand.