Can I Claim Business Insurance Premiums as a Business Expense in Canada?
Business insurance premiums are generally fully deductible: commercial liability, property, professional indemnity (E&O), and business interruption insurance. Life insurance premiums are generally not deductible, though CRA lists exceptions when the policy is used as loan collateral. Motor vehicle insurance is claimed with the vehicle expenses.
Finn does your books in Canada
AccountsOS keeps the books for Canada businesses, tracks tax deadlines and handles expenses, in plain English. Ask Finn about yours, no signup needed.
What Canada Revenue Agency (CRA) says
CRA allows insurance premiums as a business deduction when the insurance protects against business risks. CRA's guide says commercial premiums for buildings, machinery and equipment used in the business are deductible, and motor vehicle insurance is claimed with vehicle expenses. It states that life insurance premiums are generally not deductible, with exceptions where the policy is used as collateral for a loan. Whether the collateral exception applies depends on the conditions, so check the specific facts before claiming.
When you can claim
- Commercial general liability insurance premiums
- Professional liability (errors and omissions) insurance
- Business property and contents insurance
- Directors and officers (D&O) liability insurance
- Business interruption insurance premiums
When you cannot claim
- Personal life insurance premiums, unless the collateral insurance conditions are met
- Insurance premiums for personal vehicles used partially for business (only the business-use portion)
- Health insurance premiums in most cases (though group health benefit plans have special rules)
- Insurance against fines or penalties
Good to know
Pro tip: Make sure your business insurance policy is in the company's name (not your personal name) for the deduction to be cleanest. For professional service businesses, E&O insurance is both a legal safeguard and a fully deductible operating cost. Keep the declarations page for each year, because it lists the coverage and the insured business.
Important: Motor vehicle insurance belongs with the vehicle claim, using the business-kilometre percentage. Keep policy documents and renewal notices in the company's name for the year's records.
Stop guessing what you can claim in Canada
AccountsOS automatically categorises expenses with Canada Revenue Agency (CRA)-aware rules and tells you exactly what is claimable.
Try Free