Can my LLC write off business insurance premiums?

Yes. Most business insurance premiums, including general liability, professional liability, and workers’ compensation, are deductible as ordinary business expenses for an LLC.

Where do I deduct insurance premiums on my LLC taxes?

Single-member LLCs use Schedule C, Line 15. Multi-member LLCs and S corps use Form 1065 or 1120-S and pass the deduction through to members' K-1s.

Is health insurance for LLC owners deductible?

It can be. Health insurance for owners may be deductible on their personal tax return under the self-employed health insurance deduction, depending on how the LLC is taxed.

What types of insurance are not deductible by an LLC?

Personal insurance policies such as life insurance, homeowner’s insurance, or personal auto insurance are generally not deductible unless directly tied to business use.

What records do I need to deduct insurance through my LLC?

Keep copies of policies, invoices, and payment records. Ensure payments are made from your LLC account and properly categorized in your accounting records.

Can I Write Off Business Insurance as an LLC Expense?

Yes, your LLC can typically deduct the cost of business insurance as a legitimate business expense on your taxes-provided the policy is for ordinary and necessary coverage related to your operations.

Business insurance helps protect your LLC from lawsuits, property damage, employee injuries, and more. The good news is that the IRS generally considers these costs deductible as long as they serve a valid business purpose. This can reduce your LLC’s taxable income and lower your overall tax bill.

Contents

1. What Types of Business Insurance Are Deductible?
2. Where Do You Claim the Deduction?
3. What About Health Insurance?
4. Insurance That Is Not Deductible
5. Documentation Tips for LLC Insurance Deductions

1. What Types of Business Insurance Are Deductible?

Most common forms of business insurance qualify as deductible expenses, including:

General liability insurance – covers third-party injury, property damage, and legal fees
Professional liability insurance (E&O) – protects against negligence or service-related claims
Commercial property insurance – insures your business space, inventory, or equipment
Workers’ compensation insurance – required in most states if you have employees
Cyber liability insurance – covers data breaches and cybercrime losses
Product liability insurance – protects against lawsuits caused by defective products
Business interruption insurance – replaces income lost due to unexpected closures

As long as the policy is purchased specifically for business purposes and not for personal use, you can deduct the premiums as part of your LLC’s ordinary and necessary operating expenses.

2. Where Do You Claim the Deduction?

Where you claim the insurance write-off depends on how your LLC is taxed:

Single-member LLC (default sole proprietorship): Deduct on Schedule C, Line 15 (Insurance, other than health)
Multi-member LLC (default partnership): Report on Form 1065 and pass through to each member’s Schedule K-1
LLC taxed as an S corporation: Deduct on the corporate tax return (Form 1120-S), then report on each shareholder’s K-1

In all cases, you should maintain records of your policy, payments, and invoices in case of IRS review.

3. What About Health Insurance?

If your LLC pays for health insurance, deductibility depends on several factors:

If you are a sole proprietor or LLC member (not treated as an employee), you may be able to deduct premiums under the self-employed health insurance deduction on your personal return (Form 1040, Schedule 1).
If your LLC is taxed as an S corp and you own more than 2%, the company can pay your premiums, but they must be included in your W-2 as taxable wages. You may still qualify for the self-employed deduction personally.
If your spouse or dependents are covered under the business policy, those premiums may also be deductible under certain conditions.

Health insurance is a bit more complex, but it is often at least partially deductible for LLC owners.

4. Insurance That Is Not Deductible

Not all insurance is deductible through your LLC. Here are some examples of what typically does not qualify:

Personal auto insurance (unless the vehicle is used for business and properly documented)
Life insurance policies for owners or employees (unless used as part of a qualified plan)
Homeowner’s insurance for a personal residence, even if you work from home (unless partially allocated for a home office)

To claim any portion of personal insurance, it must be directly tied to business use and substantiated with proper records.

5. Documentation Tips for LLC Insurance Deductions

To ensure your business insurance is deductible and IRS-compliant, follow these best practices:

Keep copies of all policies and premium payment receipts
Pay for insurance from your business bank account, not personal funds
List the coverage and purpose in your accounting system or expense tracker
Consult with a tax professional for complex or bundled policies

Accurate documentation not only protects you in the event of an audit but also helps you clearly separate personal and business expenses-which is essential for maintaining your LLC’s legal protection.

Yes, you can usually write off business insurance as an LLC expense. Whether you’re covering general liability, cyber protection, or professional errors, those premiums are considered ordinary and necessary business costs under IRS rules. Just make sure you use your LLC’s funds to pay for coverage, track everything, and avoid blending personal and business policies. When handled correctly, this deduction can reduce your tax burden and strengthen your company’s financial health.