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. Key-person life insurance may be deductible if the company is the beneficiary and the policy is required by a lender. Personal life insurance premiums are generally not deductible, even when used as loan security.
What Canada Revenue Agency (CRA) says
CRA allows insurance premiums as a business deduction when the insurance protects against business risks. IT-430 (now archived) and general deductibility principles support the deduction for commercial policies. Key-person life insurance is deductible when the premium relates to an arm's length loan requirement. Personal life insurance is not deductible even when the policy is assigned to secure a business loan.
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, even when pledged as collateral for a business loan
- 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.
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