Is insurance tax deductible?
Generally yes — for business insurance. Insurance premiums that protect your business, its property, employees, or operations are deductible as ordinary and necessary business expenses. Personal insurance and life insurance where the business is the beneficiary are generally not deductible.
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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 · Specific lookups · FAQ
Short answer
Generally yes for business insurance. Premiums for insurance that protects your business operations, property, professional activities, or employees are fully deductible on Schedule C, Line 15. Personal insurance is not deductible, and life insurance has specific disqualifying rules.
Health insurance for self-employed individuals is a special category — it does not go on Schedule C Line 15. It is deducted on Form 1040, Schedule 1, Line 17. See the health insurance deductibility guide.
FreshBooks — Track insurance premiums and business expenses automatically
Categorize insurance invoices throughout the year so your Schedule C Line 15 deductions are organized at tax time.
Who this typically applies to
- Self-employed individuals and sole proprietors carrying liability, professional liability, or business property insurance
- Small business owners with general liability, workers' compensation, commercial auto, or business interruption coverage
- Freelancers and consultants required to carry errors and omissions (E&O) or professional liability insurance for client contracts
- Businesses with vehicles using commercial auto insurance or personal vehicles for business purposes
Business insurance types: What's deductible
| Insurance type | Deductible? | Schedule C line |
|---|---|---|
| General liability insurance | Yes — fully deductible | Line 15 |
| Professional liability / E&O insurance | Yes — fully deductible | Line 15 |
| Commercial auto insurance | Yes — fully deductible for business vehicles | Line 15 or Line 9 (Car and Truck) |
| Business property insurance | Yes — fully deductible | Line 15 |
| Workers' compensation insurance | Yes — fully deductible | Line 15 |
| Business interruption insurance | Yes — fully deductible | Line 15 |
| Cyber liability insurance | Yes — fully deductible | Line 15 |
| Personal auto insurance (business-use portion) | Business % only — if using actual expense method | Line 9 (Car and Truck) |
| Health insurance (self-employed) | Yes — but not on Schedule C | Form 1040, Schedule 1, Line 17 |
| Life insurance (business beneficiary) | No — specifically disallowed | Not deductible |
| Personal homeowner's / renter's insurance | Home office % only | Form 8829 → Line 30 |
When business insurance is tax deductible
- The policy covers business property, operations, professional liability, or employees
- The coverage is ordinary and necessary for your type of business — required by contract, law, or industry standard
- You pay the premium yourself and are not reimbursed
- The insurance protects against business risks — not personal risks
- You keep the policy documents and premium invoices as documentation
When insurance is not deductible
- Personal insurance — homeowner's, personal auto, personal umbrella, personal life insurance
- Life insurance where the business or owner is the beneficiary — see the life insurance section below
- Premiums for coverage that is reimbursed by another party
- Insurance on property that is not used for business
- Premiums paid for insurance that is capital in nature rather than an operating expense (rare edge cases)
Life insurance: Why it's generally not deductible
Life insurance premiums are specifically not deductible when the taxpayer or their business is directly or indirectly a beneficiary of the policy. This rule applies even when the insurance serves a legitimate business purpose.
Life insurance situations that are not deductible
- Key-person life insurance: Policy on a key employee where the company is the beneficiary — not deductible
- Buy-sell agreement life insurance: Policy funding a business buyout — not deductible
- Owner's personal life insurance: Not deductible regardless of business purpose claimed
- Split-dollar life insurance: Generally not deductible for the business
While key-person and buy-sell life insurance policies serve real business purposes, the IRS specifically disallows the premium deduction when the business is the beneficiary. The reasoning is that the policy benefit (the death benefit) is also not taxable income when received — the non-deductibility and non-taxability mirror each other.
Where does business insurance go on Schedule C?
Most business insurance premiums go on Schedule C, Line 15 (Insurance). This is a dedicated line for business insurance costs and is separate from vehicle expenses, home office expenses, and health insurance.
Vehicle insurance for a business vehicle goes on Line 9 (Car and Truck Expenses) if you are using the actual expense method, not Line 15. If you are using the standard mileage rate, vehicle insurance is included in the rate and cannot be deducted separately.
Example: Annual insurance deductions for a freelance consultant
Example: Independent marketing consultant
- Professional liability (E&O) insurance: $1,200/year → Line 15 ✓
- General liability insurance: $600/year → Line 15 ✓
- Business property rider on renter's insurance: $180/year → Line 15 ✓
- Personal auto insurance (vehicle 65% business use, actual expense method): $1,400 × 65% = $910 → Line 9 ✓
- Key-person life insurance (company beneficiary): $2,400/year → not deductible ✗
- Total deductible insurance: $2,890
At a 22% effective tax rate, $2,890 in insurance deductions saves approximately $636 in taxes. The life insurance premium is excluded despite serving a real business purpose — the IRS disallows it because the business is the beneficiary.
What records to keep
- Insurance policy documents showing coverage type, policy period, and insured party
- Annual premium invoices or billing statements
- Proof of payment (bank statement or card record)
- For mixed-use policies: documentation of the business-use percentage and allocation method
- For vehicle insurance under actual expense method: your overall vehicle business-use percentage records
TurboTax Self-Employed — Claim business insurance deductions on Schedule C Line 15
TurboTax Self-Employed walks through Schedule C Line 15 and separates business insurance from vehicle and health insurance costs automatically.
FAQ
Is business insurance tax deductible?
Yes. Business insurance premiums are generally tax deductible as ordinary and necessary business expenses when the coverage protects a business, its property, employees, or operations. Common deductible types include general liability, professional liability (E&O), commercial auto, workers' compensation, and property insurance. Report on Schedule C, Line 15.
Is personal insurance tax deductible?
Generally no. Personal insurance premiums — homeowner's insurance, personal auto insurance, personal life insurance — are not deductible as business expenses. Exceptions exist for the business-use portion of a vehicle insured under a personal auto policy (under the actual expense method), and for the self-employed health insurance deduction on Form 1040.
Is life insurance tax deductible for a business?
Generally no. Life insurance premiums are not deductible when the business or business owner is the beneficiary — including key-person life insurance, buy-sell agreement policies, and personal life insurance. The IRS specifically disallows the deduction because the death benefit received is also not taxable income.
Can I deduct insurance that covers both personal and business use?
Only the business-use portion is deductible. For a personal auto insurance policy on a vehicle used 60% for business, you can deduct 60% of the premium under the actual expense method. Keep documentation of your business-use percentage to support the allocation.
Where does business insurance go on Schedule C?
Most business insurance premiums go on Schedule C, Line 15 (Insurance). Vehicle insurance under the actual expense method goes on Line 9 (Car and Truck Expenses). Self-employed health insurance does not go on Schedule C at all — it is deducted on Form 1040, Schedule 1, Line 17.
Is professional liability insurance tax deductible?
Yes. Professional liability insurance (E&O insurance) is fully deductible as a business expense when it covers your professional services or business operations. It is an ordinary and necessary cost for many freelancers, consultants, and service providers. Report on Schedule C, Line 15.
Looking for other deductible expenses? See the full Expense Deductibility Guide.
Last reviewed: April 14, 2026