Business Insurance (Other Than Health)

No matter what your industry, insurance is an expense almost every business owner is likely to incur. Whether it be general liability, error and omission, life, disability, renters, or other, if your policy is related to your business your premiums will likely be deductible on your Schedule C. Note that our discussion below does not include health insurance and related deductions, which are covered on the following pages: “Self-employed Health Insurance Deduction”, “Small Business Health Care Tax Credit”, “Health Savings Account” and “Deductible Medical and Dental Expenses (Itemized)”.


Bee, a Portland, Oregon based driver for Postmates tracked his vehicle expenses in 2017 using Hurdlr and found he spent $1,500 insurance. Bee can attribute 50% of his miles to Postmates. If Bee’s auto policy covers his business driving, using the actual method he could deduct $750 of his auto insurance on line 9 of his Schedule C. If Bee used the $0.535 per mile standard rate to deduct his vehicle expenses he would not be allowed to deduct any of his auto insurance as a business expense (cost included in standard rate).


Hillary rents her apartment from a landlord but hosts the second bedroom in her home on Airbnb (25% of home related to rental activities), which is occupied by guests nearly every day. Hillary carries a renters insurance policy that specifically covers her Airbnb activities. Her policy is $1,200 and runs from March 1, 2017 through February 28, 2018. Hillary could deduct a total of $300 ($1,200 x 25%) on line 9 of her Schedule E, $250 in 2017 ($300/12 x 10 months) and $50 ($300/12 x 2 months) in 2018.


Jess is a sole-practitioner psychiatrist who started her business in January of this year. Since this is her first year in business, her malpractice premiums are $12,000. When Jess prepares her taxes next April she will be able to deduct the full $12,000 of insurance premiums on line 15 of her Schedule C.


Tring is a web developer who is entering his second year of business and ready to hire his first employee. To be competitive, he wants to provide life insurance as an employee benefit. As long as Tring does not stand to benefit from the policy, he would generally be able to deduct the premiums he pays for his new employee on line 14 of his Schedule C.


Joe recently began operating a food truck, serving sloppy joes to customers who line up around the block to try his secret recipe. In January 2017, Joe prepaid $12,000 for two years of general liability insurance to limit his liability in the event a customer falls ill from his food, slips on ice while waiting to order or suffers burns from his piping hot food, amongst other things. When Joe prepares his 2017 tax return, he can deduct $6,000 on line 15 of his Schedule C for his 2017 coverage. In April, 2019 when he prepares his 2018 return he can deduct $6,000 for his 2018 coverage.


  • In most cases you can deduct insurance expenses directly related to your business including but not limited to liability insurance, malpractice insurance, auto insurance, life insurance (if you are not direct or indirect beneficiary), and health insurance (discussed elsewhere), to name a few.
  • Certain insurance premiums are not deductible including self-insurance, life insurance where you are directly or indirectly the beneficiary (additional limitations for partnerships), life insurance to secure a loan, and loss of earnings insurance.
  • Generally, insurance premiums are deductible in the year they apply. In other words, if you pre-pay for a policy that covers you in multiple tax years, your premiums will only be deductible during the year of coverage (i.e. 2017 premium deducted in 2017, 2018 premium in 2018, etc.).
  • If you pay for insurance on certain property the cost of your premiums may need to be capitalized / added to the basis of the insured asset(s).
  • If you do not have business insurance but think you qualify to deduct a portion of your personal insurance as a business expense (i.e. auto insurance for uber driver, homeowners insurance for Airbnb host, etc.), make sure your personal policy covers your business activity. If it doesn’t your premiums likely will not be deductible.
  • There are many rules surrounding deductions for insurance premiums. Before you deduct your insurance premiums, you should discuss treatment with your tax advisor.

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