Is insurance tax deductible?
Generally yes — for business insurance. Premiums that protect a business, its property, employees, professional work, or operations are usually deductible. Personal insurance is generally not deductible, while vehicle, health, home-office, and life insurance have their own rules.
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On this page: Short answer · Who this applies to · Insurance types · When it's deductible · When it's not deductible · Life insurance — special rules · Schedule C · Example · Records · IRS sources · Specific lookups · FAQ
Short answer
Generally yes. Ordinary and necessary insurance for a business is usually deductible. For a sole proprietor, most business-insurance premiums go on Schedule C, Line 15.
Important exceptions use different rules: actual vehicle insurance goes with car and truck expenses on Line 9; employee accident/health coverage uses Line 14; self-employed health insurance is generally figured separately; qualifying home-office insurance is part of the actual home-office calculation; and some life-insurance premiums are not deductible.
FreshBooks — Organize business insurance expenses
Keeping premium invoices and recurring business expenses categorized can make tax-time reporting easier.
Who this typically applies to
- Self-employed people and sole proprietors carrying liability, professional, property, or cyber coverage
- Small businesses with employees paying workers' compensation or other business insurance
- Freelancers and consultants carrying E&O or professional liability coverage for client work
- Businesses with vehicles that need to separate vehicle-insurance rules from other business insurance
Business insurance types: What's deductible
| Insurance type | Usually deductible? | Where it generally goes |
|---|---|---|
| General liability | Yes | Schedule C, Line 15 |
| Professional liability / E&O | Yes | Schedule C, Line 15 |
| Business property insurance | Yes | Schedule C, Line 15 |
| Workers' compensation | Yes | Schedule C, Line 15 |
| Business interruption insurance | Yes | Schedule C, Line 15 |
| Cyber liability insurance | Yes | Schedule C, Line 15 |
| Commercial / business-use auto insurance | Depends on vehicle method | Actual vehicle expenses: Line 9 |
| Self-employed health insurance | May qualify | Form 7206 / Schedule 1, Line 17 on the latest final forms |
| Life insurance | Depends | Not deductible if you or the business are directly or indirectly the beneficiary |
| Homeowner's / renter's insurance for a qualifying home office | Business-use share under actual method | Form 8829, flowing to Schedule C home-office deduction |
These are federal rules for Schedule C filers. Other business entities can use different forms even when the underlying deduction rule is similar.
When business insurance is tax deductible
- The coverage protects a real business risk, property, operation, employee, or professional service
- The premium is an ordinary and necessary cost of the business
- You pay the cost and are not reimbursed for it
- Any personal-use portion is separated from the business portion
- You keep the policy, invoice, and payment records
When insurance is not deductible
- Personal-only coverage with no business connection
- Self-insurance reserves — amounts simply set aside for possible future losses
- Loss-of-earnings insurance that pays you for income lost because of sickness or disability
- Certain life insurance when you or the business are directly or indirectly the beneficiary
- Any portion of a mixed-use policy that relates to personal rather than business use
Life insurance: When the premium is not deductible
Usually no when the business benefits from the policy proceeds. If you or your business are directly or indirectly the beneficiary of a life insurance policy, the premium is generally not deductible even when the policy has a business purpose.
- Key-person life insurance: generally not deductible when the company is the beneficiary
- Buy-sell funding: generally not deductible when the taxpayer is directly or indirectly the beneficiary
- Life insurance used to secure a business loan: generally not deductible as an insurance or interest expense
This does not mean every business-paid life policy is nondeductible. Life insurance covering employees can be deductible when the business is not directly or indirectly the beneficiary; employee-benefit and compensation reporting rules can also apply.
Where business insurance goes on Schedule C
Line 15 — Insurance: most ordinary business-insurance premiums, such as liability, E&O, property, cyber, business interruption, and workers' compensation.
- Vehicle insurance: include the business share on Line 9 when using actual vehicle expenses; do not deduct it separately when using standard mileage.
- Employee accident and health coverage: the Schedule C instructions direct these amounts to Line 14.
- Self-employed health insurance: generally figured on Form 7206 and reported on Schedule 1, Line 17 on the latest final forms, not on Schedule C Line 15.
- Home-office insurance: the business-use portion can be included in the actual home-office calculation on Form 8829 when the home office qualifies.
Example: Insurance deductions for a freelance consultant
- Professional liability / E&O: $1,200 → Line 15
- General liability: $600 → Line 15
- Cyber liability: $400 → Line 15
- Personal life insurance: $0 business deduction
- Total ordinary business-insurance deduction: $2,200
What records to keep
- Insurance policy or certificate showing the coverage and policy period
- Premium invoices or renewal notices
- Proof of payment
- A short note showing how the policy relates to the business when the purpose is not obvious
- For mixed-use coverage, records supporting the business-use percentage
TurboTax — Report business insurance expenses
Use the business-expense interview to separate ordinary business insurance from vehicle, employee health, self-employed health, and home-office insurance costs.
FAQ
Is business insurance tax deductible?
Generally yes. Ordinary and necessary business-insurance premiums are usually deductible. For a Schedule C filer, most business-insurance premiums go on Line 15, while vehicle, employee health, self-employed health, and home-office insurance use different rules.
Is personal insurance tax deductible as a business expense?
Generally no. Personal-only insurance is not a business deduction. A mixed-use policy may allow only the business-use portion when a specific business deduction rule applies.
Is life insurance tax deductible for a business?
Generally not when the taxpayer or business is directly or indirectly the beneficiary. Employee life insurance can be different when the business is not the beneficiary.
Can I deduct insurance that covers both personal and business use?
Only the business-use portion is potentially deductible. The allocation method depends on the type of insurance; for vehicle insurance, business miles divided by total miles is commonly used.
Where does business insurance go on Schedule C?
Most ordinary business-insurance premiums go on Schedule C, Line 15. Actual vehicle insurance belongs with car and truck expenses on Line 9, and employee accident and health coverage is directed to Line 14.
Is professional liability insurance tax deductible?
Yes. Professional liability or E&O insurance is generally deductible when it protects your business or professional services from ordinary business risks.
Looking for other deductible expenses? See the full Expense Deductibility Guide.
Last reviewed: August 18, 2026