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Can You Write Off Commercial Auto Insurance?
March 23, 2021
Agency

Can You Write Off Commercial Auto Insurance?

Commercial auto insurance is important for several businesses, especially those that transport materials or products. Commercial auto insurance can be expensive, however, so you may wonder if your business can write off commercial auto insurance on its taxes. 

Unfortunately, this isn’t generally the case. There is an exception for certain disasters such as named hurricanes and wildfires, but you generally cannot deduct any personal losses concerning your auto insurance policy. You also can’t write off a loss if you’ve already received compensation from your insurance company. a car parked in a parking lot

It’s crucial to make sure your vehicle actually qualifies for commercial auto insurance. A personal vehicle used to commute to and from work does not qualify for commercial auto insurance and should be covered with a personal auto policy. If you insure a personal vehicle with commercial insurance and the insurance agency discovers that the vehicle is not being used for business, they are well within their rights to drop you. If you have any questions about which policy you need, consider how the vehicle is used and how often it’s used for work. Taking an occasional client to lunch or sometimes picking up items for the office should be covered beneath a personal insurance policy. However, if you frequently travel for work, transport clients or deliver work items, you may need commercial auto insurance. 

If you use a vehicle for both business and personal use, you may partially deduct the cost from your taxes. This can only be done for the time when the vehicle is used for work purposes. For example, if you use the vehicle for work 80% of the time, you may deduct 80% of the insurance cost from your taxes. An exception would be if your employer reimburses you for car insurance. 

Car Insurance Write-Offs for Rideshare Drivers 

Driving rideshare services such as Uber or Lyft presents a whole new range of risks. These services usually provide some type of insurance, though not always. You may write off your car insurance for the periods you are using the vehicle for work. 

Tips for Deducting Car Insurance from Your Taxes 

  • Keep detailed records of when you are using the vehicle for work 

  • Keep records for at least three years 

  • Fill out Form 2106 under “Insurance” on your W-2 

  • Hire an accountant 

Keep in mind that expenses that are compensated for, either by your employer or insurance agency, are not generally tax deductible. This includes possible mileage expenses. Gas is expensive, and if you use your vehicle for anything work-related that’s not commuting, you may be able to deduct the cost from your taxes as long as your employer doesn’t reimburse your traveling expenses.

Tags: auto, collision, commercial, coverage, damage, insurance

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