Can I deduct business insurance premiums in Canada?
Yes — premiums paid for business-related insurance are deductible as business expenses on Form T2125. Examples of deductible business insurance include: - **Professional liability (E&O) insurance**: Errors and omissions coverage for consultants, advisers, health professionals - **Commercial general liability insurance**: Coverage for property damage or personal injury caused by your business - **Business interruption insurance**: Coverage for lost income during forced closures - **Product liability insurance**: For businesses that sell physical products - **Equipment breakdown insurance**: Coverage for business equipment failure - **Cyber insurance**: Protection against data breaches or cyberattacks **Not deductible:** - Personal life insurance premiums (unless the policy is assigned as collateral for a business loan) - Personal health/disability insurance (these may qualify as Medical Expenses or other personal credits) - Vehicle insurance — the business-use portion is deducted as part of vehicle expenses, not separately **Home insurance:** If you claim a home office, the business-use portion of your home insurance premium is deductible under Part 6 of T2125 (home office expenses), not as a separate business insurance expense.
- Professional liability and commercial insurance premiums are fully deductible
- Personal life insurance is not deductible
- Vehicle insurance: deduct only the business-use portion as part of vehicle expenses
- Home insurance: business-use portion goes under home office expenses (T2125 Part 6)
- Keep insurance documents and premium receipts for 6 years