Can you deduct business insurance as a freelancer? Liability, professional indemnity and equipment cover under IRS, HMRC and CRA rules (US, UK, Canada)

Freelancers buy public liability cover for client sites, professional indemnity for advice or design work, and insurance for a laptop, camera or studio. Here's what the IRS, HMRC and the CRA say about which premiums count as a business expense, which cover for yourself doesn't, where vehicle and home insurance go instead, and what to do when you pay for more than a year at once.

General information, not tax, legal or insurance advice. Not written or reviewed by a lawyer, an accountant or an insurance broker. The short answer, the side-by-side summary, the steps, the checklist, the wording to copy and all the other wording are ours; the official items come from the US, UK and Canadian government pages linked below. This page is about a self-employed person (a sole proprietor or sole trader) paying insurance premiums. It doesn't tell you which cover to buy or whether a particular premium is deductible, and it doesn't cover insurance for employees, payroll, companies, US states, Canadian provinces, Quebec, or other countries. Rules change; check the current official pages before you claim. Official pages were read on 2026-10-19.

The short answer

1. US: "You can generally deduct premiums you pay for the following kinds of insurance related to your business." The list includes liability, malpractice, fire, theft and similar cover, and business interruption insurance. Premiums go on their own line of your business schedule.
2. UK: "You can claim for any insurance policy for your business, for example public liability insurance." GOV.UK also lists professional indemnity insurance premiums as allowable.
3. Canada: "You can deduct commercial insurance premiums that you pay for insurance on any buildings, machinery, and equipment you use in your business."
4. Cover for yourself, such as health, income protection and life insurance, follows different rules in all three countries; in the US and Canada some health cover has its own deduction.
5. Vehicle and home insurance usually go with your vehicle or home costs, for the business part only.

On this page

• 1. United States: business insurance you can deduct
• 2. United States: cover for yourself, vehicles, your home and paying ahead
• 3. United Kingdom: insurance policies for your business
• 4. United Kingdom: cover for yourself, vehicles and where it goes
• 5. Canada: the insurance line
• 6. Canada: vehicles, your home, health premiums and paying ahead
• 7. Side by side
• 8. Step by step
• 9. Wording to copy
• 10. Checklist
• Free tools and kits
• Where the sources differ
• When to get advice
• Related
• Sources

1. United States: business insurance you can deduct

• The general test: "To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your field of business. A necessary expense is one that is helpful and appropriate for your business. An expense does not have to be indispensable to be considered necessary." (IRS: Publication 334 (2025), Tax Guide for Small Business, page date 30-Apr-2026).
• The insurance list: "You can generally deduct premiums you pay for the following kinds of insurance related to your business."
  • Fire, theft, flood, or similar insurance.
  • Credit insurance that covers losses from business bad debts.
  • Group hospitalization and medical insurance for employees, including long-term care insurance.
  • Liability insurance.
  • Malpractice insurance that covers your personal liability for professional negligence resulting in injury or damage to patients or clients.
  The list goes on to workers' compensation and life insurance for employees, which are about staff.
• Business interruption: "Business interruption insurance that pays for lost profits if your business is shut down due to a fire or other cause."
• Cover for overheads while you're ill: "Overhead insurance that pays for business overhead expenses you have during long periods of disability caused by your injury or sickness."
• Where it goes: under Line 15, the instructions for the business schedule say "Deduct premiums paid for business insurance on line 15. Deduct on line 14 amounts paid for employee accident and health insurance. Do not deduct amounts credited to a reserve for self-insurance or premiums paid for a policy that pays for your lost earnings due to sickness or disability." (IRS: Instructions for Schedule C (Form 1040) (2025), page date 30-Apr-2026).
• Premiums that don't count: "You can’t deduct premiums on the following kinds of insurance."
  • Self-insurance reserve funds. You can’t deduct amounts credited to a reserve set up for self-insurance. This applies even if you can’t get business insurance coverage for certain business risks.
  • Loss of earnings. You can’t deduct premiums for a policy that pays for your lost earnings due to sickness or disability.

For the schedule itself, see Schedule C for US freelancers.

2. United States: cover for yourself, vehicles, your home and paying ahead

• Life insurance: "For contracts issued after June 8, 1997, you generally can’t deduct the premiums on any life insurance policy, endowment contract, or annuity contract if you are directly or indirectly a beneficiary. The disallowance applies without regard to whom the policy covers." "Insurance to secure a loan. If you take out a policy on your life or on the life of another person with a financial interest in your business to get or protect a business loan, you can’t deduct the premiums as a business expense." The instructions add: "You cannot deduct contributions you made on your behalf as a self-employed person for group-term life insurance."
• Health insurance for yourself: "You may be able to deduct the amount you paid for medical and dental insurance and qualified long-term care insurance for you and your family." It isn't a business schedule expense; under Line 14 the instructions say "Do not include on line 14 any contributions you made on your behalf as a self-employed person to an accident and health plan." "However, you may be able to deduct on Schedule 1 (Form 1040), line 17, the amount you paid for health insurance on behalf of yourself, your spouse, and dependents, even if you do not itemize your deductions." This page doesn't cover who qualifies.
• Vehicle insurance: "Car and other vehicle insurance that covers vehicles used in your business for liability, damages, and other losses. If you operate a vehicle partly for personal use, deduct only the part of the insurance premium that applies to the business use of the vehicle. If you use the standard mileage rate to figure your car expenses, you can’t deduct any car insurance premiums." Under Line 9, for actual expenses: "Include on line 9 the business portion of expenses for gasoline, oil, repairs, insurance, license plates, etc.; and"
• Your home: insurance on a home you work from is treated as part of the home office deduction: the publication lists insurance among the home costs whose deduction is limited by the income from the business use of your home.
• Paying ahead: "You can’t deduct expenses in advance, even if you pay them in advance. This rule applies to any expense paid far enough in advance to, in effect, create an asset with a useful life extending substantially beyond the end of the current-tax year." The publication's example: "In 2025, you signed a 3-year insurance contract. Even though you paid the premiums for 2025, 2026, and 2027 when you signed the contract, you can only deduct the premium for 2025 on your 2025 tax return. You can deduct in 2026 and 2027 the premiums allocable to those years."
• If the insurer pays you: "If you reduce or stop your business activities, report on Schedule C (Form 1040) any payment you receive for the lost income of your business from insurance or other sources."

For when an expense counts in the year, see cash or accrual accounting for freelancers; for vehicle records, our free mileage log.

3. United Kingdom: insurance policies for your business

• Any business policy: "You can claim for any insurance policy for your business, for example public liability insurance." (GOV.UK: Expenses if you're self-employed, legal and financial costs, page date 2024-11-08).
• Professional indemnity: "If you’re self-employed - a sole trader or individual in a business partnership - accountancy, legal and other professional fees can count as allowable business expenses." "You can claim for costs such as:"
  • hiring of accountants, solicitors, surveyors and architects only for business reasons
  • professional indemnity insurance premiums
• Premises and equipment: under rents, rates, power and insurance costs, "You can claim expenses for costs such as:"
  • rent for business premises
  • business and water rates
  • utility bills
  • property insurance
  • security
  • using your home as an office (only the part that’s used for business)
  "You cannot claim for any non-business use of premises, phones or other office resources." (GOV.UK: Expenses if you're self-employed, office, property and equipment, page date 2024-11-08).
• How HMRC looks at it: "Whether insurance premiums are deductible from trading profits depends on what is insured and whether the insurance has been taken out for the purposes of the trade." (HMRC: BIM45500 - Specific deductions: insurance: contents, page date 2016-04-01).
• Cover for business assets: "Annual premiums on policies providing indemnity for damage to or loss of fixed assets (including intangible assets) are allowed as a deduction provided they are incurred wholly and exclusively for the purposes of the trade (see BIM37000 onwards)." The manual adds that new-for-old cover doesn't change this (HMRC: BIM45501 - Specific deductions: insurance: fixed assets, page date 2016-04-01).
• Loss of profits: "Premiums on policies insuring against loss of profits from the following contingencies are allowable deductions in computing trading profits:" The events it lists include a fire at the business premises, losing the use of premises or equipment, and supplies being cut off (HMRC: BIM45510 - Specific deductions: insurance: loss of profits, page date 2018-10-18).
• Professional negligence: "Premiums on an indemnity policy providing cover for professional negligence are allowable as a deduction." "However, any damages, etc. paid as a result of professional negligence are not an allowable deduction to the extent that they are recoverable under an indemnity policy." (HMRC: BIM45515 - Specific deductions: insurance: professional negligence, page date 2018-10-18).
• If you're not sure: "If you’re not sure whether a business cost is an allowable expense contact HM Revenue and Customs (HMRC)."

4. United Kingdom: cover for yourself, vehicles and where it goes

• Life, accident and sickness cover for yourself: "Premiums paid by a sole trader or partner to provide life, accident or sickness insurance cover for him/herself or a partner are not allowable deductions in computing trading profits. Such insurance policies are often known as permanent health insurance policies." "Similarly, the benefits payable under such policies are not trading income." (HMRC: BIM45560 - Specific deductions: insurance: own health policies and own insurance funds, page date 2016-04-01).
• Cover for business costs while you're ill: "By contrast with permanent health insurance policies (see BIM45560), the premiums on certain sickness insurance policies are allowable deductions." "These insurance policies indemnify the policyholder against business costs such as payments to a locum to temporarily carry out the policyholder’s professional activities, or other fixed overheads, in the event of the policyholder’s incapacity to carry on the business during a period of illness." "Policies of this type are held mainly by medical professionals such as doctors and dentists who practise alone or in partnership." "If a policy includes insurance against the cost of personal expenses such as medical treatment and the premiums are paid partly for a personal purpose, apportionment may be necessary so as to allow only the proportion of the premium that relates to practice expenses cover (see BIM42115)." (HMRC: BIM45565 - Specific deductions: insurance: locum and fixed overheads, page date 2016-04-01).
• Vehicle insurance: "If you’re self-employed - a sole trader or individual in a business partnership - you can claim allowable business expenses for costs such as:" The list starts with "vehicle insurance" (GOV.UK: Expenses if you're self-employed, car, van and travel expenses, page date 2024-11-08). If you use the flat rate instead: "Calculate your vehicle expenses using a flat rate for mileage instead of the actual costs of buying and running your vehicle, for example insurance, repairs, servicing, fuel." (GOV.UK: Simplified expenses if you're self-employed, vehicles, page date 2020-08-19).
• The short pages: "Fill in the ‘Self-employment (short)’ pages if your turnover was less than £90,000 (or would have been if you had traded for a full year)." "Allowable expenses include wages, rent for business premises, lighting, postage, phone calls and motor costs such as fuel and insurance." "If your annual turnover was below £90,000, you may just put your total expenses in box 20." (HMRC: Self-employment (short) notes, Tax year 6 April 2025 to 5 April 2026 (2025–26), a PDF with no page date).
• The full pages: Box 21 Rent, rates, power and insurance costs: "This includes, for example, rent for business premises, business and water rates, light, heat, power, property insurance, security, and the business use of your home (business proportion or simplified expenses amount)." Box 28 Accountancy, legal and other professional fees: "This includes fees for accountants, solicitors, surveyors, architects and other professionals and indemnity insurance premiums." (HMRC: Self-employment (full) notes, Tax year 6 April 2025 to 5 April 2026 (2025–26), a PDF with no page date).
• If the insurer pays you: "In most situations, if the insurance premiums are allowable deductions from trading profits, the receipts from the policy are taxable as trading income. Where no deduction is allowed, often the receipts are not taxable as revenue."

Allowable costs go in your self-employment expenses: see UK Self Assessment for freelancers.

5. Canada: the insurance line

• The line: "You can deduct commercial insurance premiums that you pay for insurance on any buildings, machinery, and equipment you use in your business." (CRA: Line 8690 – Insurance, page date 2026-08-31).
• Life insurance: "In most cases, you cannot deduct your life insurance premiums. If you use your life insurance policy as collateral for a loan related to your business, you may be able to deduct a limited part of the premiums you paid."
• The general rule for other cover: "Generally, you can deduct any reasonable current expense you incur to earn business income." "However, since you cannot deduct personal expenses, enter only the business part of expenses on the Form T2125, Statement of Business or Professional Activities." (CRA: Expenses section of Form T2125, page date 2026-08-31). The insurance line doesn't name liability or professional indemnity cover; see "Where the sources differ" below.

The allowable part goes on your statement of business or professional activities: see our guide for Canadian freelancers.

6. Canada: vehicles, your home, health premiums and paying ahead

• Vehicle insurance: "The insurance costs related to your motor vehicle have to be claimed as Motor vehicle expenses (not including CCA)." On that line: "If you use a motor vehicle or passenger vehicle for business and personal use, you can deduct only the part of the expenses that you paid to earn income." "However, you can deduct the full amount of parking fees related to your business activities and supplementary business insurance for your motor vehicle or passenger vehicle." (CRA: Motor vehicle expenses (not including CCA), page date 2026-08-31).
• Your home: "The insurance costs related to business use of workspace in your home have to be claimed as Business-use-of-home expenses."
• Health premiums: the CRA's guide covers this under Line 9790 or 9270 – Other expenses: "You can deduct premiums paid to a private health services plan (PHSP) if you meet the following conditions:"
  • you are actively engaged in your business on a regular and continuous basis, individually or as a member of a partnership
  • the premiums are paid to insure yourself, your spouse or common-law partner, or any member of your household
  A third condition is about how much of your income comes from self-employment. "Your PHSP deduction is restricted by an annual dollar limit." (CRA: Self-employed Business, Professional, Commission, Farming, and Fishing Income: Chapter 3 – Expenses, page date 2026-04-16).
• Paying ahead: the same guide says "A prepaid expense is an expense you paid for ahead of time. Under the accrual method of accounting, claim the expense you prepay in the year or years in which you get the related benefit."

7. Side by side

Our summary of sections one to six, not official wording.

8. Step by step

Our order of steps, based on sections one to six — not an official checklist.

1. List each policy you pay for and what it covers: liability, professional indemnity, equipment, business interruption, vehicle, home, health or life.
2. For each one, decide whether it covers your business or you personally; cover for yourself, such as health, income protection or life insurance, follows different rules.
3. If a policy covers both business and personal use, such as a car or your home, work out the business part.
4. Check the official page for your country to see which line or box each policy goes on, and whether vehicle or home insurance has its own place.
5. If you paid for more than one year at once, note the start and end dates so you can put each year’s part in the right year.
6. Log each premium in your expense records on the date you paid, with the insurer, the policy, the period it covers and the amount.
7. Keep the policy schedule and the receipt or invoice for each premium with your records.
8. If the insurer pays you on a claim, keep the letter and ask an accountant how to record it before you file.

9. Wording to copy

Replace everything in [brackets]. This is ours, not from any agency, and it's not tax, legal or insurance advice. It doesn't replace the policy documents and receipts your tax office may ask for.

An insurance record for your files

Insurance record (my own records, not an official document)
Insurer and policy: [insurer name, policy reference]
Type of cover: [public liability / professional indemnity / equipment / business interruption / vehicle / home / other]
Covers: [the business / me personally / both]
Period of cover: [start date] to [end date]
Premium: [amount], paid on [date] by [payment method]
Business part: [all / part: how I worked it out]
Part that belongs to this tax year: [all / part]
Where I put it: [the line or box on my return], after checking [the official page or adviser]
Claims or payouts this year: [none / details]

A question to your accountant before you claim

Hi [accountant's name],

I pay for [type of cover] with [insurer], at [amount] for [period of cover]. It covers [what it covers].

[If shared: I also use the cover for personal use, and I work out the business part as [method].] [If paid ahead: the premium covers more than one tax year.] [If a claim: the insurer paid me [amount] on [date] for [reason].]

Could you tell me whether I can claim the premium, which line or box it goes on, and how to record any payout? I've attached the policy schedule and the receipt.

Thanks,
[your name]

10. Checklist

Our summary of the official pages above, not an official checklist.

• The policy schedule, showing what is covered and the period of cover
• The receipt or invoice for each premium
• Whether the cover is for the business or for you personally
• The business part of any vehicle or home insurance, and how you worked it out
• The part of a longer premium that belongs to this tax year
• Any payout from an insurer, with the letter that explains it
• Which line or box each premium goes on for your country
• Anything you’re not sure about, checked with the tax office or an accountant

Free tools and kits

• Our free expense tracking guide shows a simple way to keep business cost records, with an insurance category.
• Our free expense and receipt log keeps the receipt details for each cost.
• Our hourly rate calculator reminds you to count insurance among your business costs when you set a rate.
• Our paid Freelance Billing Kit by Small Rows (US$12, one-time) can log each premium as a business cost: the Expenses tab has a date, a category, a description, the amount paid and a "Deductible? (your call)" column, and the category drop-down lets you pick from a list on Settings (the US list has an insurance line for cover other than health; the UK list has a rent, rates, power and insurance costs box and an accountancy, legal and other professional fees box) or type your own, such as insurance. Each row counts in the year of the date you give it, so it doesn't spread a premium you paid ahead across tax years; enter each year's part as its own row if you need to. It doesn't decide whether a policy counts or which line it goes on, store policy documents or file anything.
• All three kits together: the All-Kits Bundle by Small Rows (US$24, one-time).

Where the sources differ

• Professional indemnity in the US: the IRS list names liability insurance and malpractice insurance for professional negligence to patients or clients, but not professional indemnity or errors and omissions cover by those names. Our reading is that such cover for your business is likely to fall under liability or malpractice insurance; ask the IRS or an adviser if you're not sure.
• Liability and professional cover in Canada: the CRA's insurance line names buildings, machinery and equipment only. Our reading is that liability and professional indemnity premiums for your business are reasonable expenses to earn business income under the general rule, and the insurance line is the natural place for them, but the pages we read don't say so; ask the CRA or an accountant.
• Which box in the UK: GOV.UK lists professional indemnity premiums under legal costs, and the full notes put indemnity insurance premiums in the professional fees box and property insurance in the rent, rates, power and insurance costs box; neither names public liability. Our reading is that if you can give a single expenses total on the short pages this doesn't matter; on the full pages, ask HMRC which box to use.
• HMRC's manual is guidance for its staff: the business income manual pages are HMRC's internal guidance, not law, and carry page dates years older than the GOV.UK pages. Our reading is that they show how HMRC looks at insurance premiums and match the current GOV.UK pages, but they don't settle a particular case.
• Overhead cover in the UK: HMRC's manual allows certain policies that pay business costs while you're ill, but says they're held mainly by doctors and dentists. Our reading is that the same approach may apply to similar cover for other freelancers, but the page is written with them in mind; ask HMRC before you claim.
• Health cover in the US and Canada: the IRS's self-employed health insurance deduction and the CRA's private health services plan deduction have their own conditions and limits that this page doesn't set out. Our reading is that neither is an ordinary business insurance premium, so check the official pages for who qualifies.
• Payouts: the IRS says to report insurance payments for lost business income on your business schedule, and HMRC's manual says receipts are usually taxable when the premiums were allowable. The CRA pages we read mention insurance money only for vehicle repairs, pointing to a line on the farming form, and don't say how a business like yours reports a payout. Our reading is that you should keep the insurer's letter and ask an accountant how to record any payout.
• Which edition: the IRS publication and instructions are the editions for the latest tax year, and the HMRC notes are for the latest tax year shown on GOV.UK. Our reading is that the rules above are current, but check for later editions before you file.
• What we did not check: which cover you need, or what clients, landlords or professional bodies require; insurance for employees, workers' compensation and payroll; US state rules and the details of the self-employed health insurance deduction; UK rules for paying a premium ahead, VAT and insurance premium tax, and Scotland, Wales and Northern Ireland differences; GST/HST on premiums, Quebec rules and provincial requirements in Canada; how any of this works through a company or partnership; other countries' rules.

When to get advice

• a policy covers both your business and you personally, or your home or vehicle;
• you paid for more than one year of cover at once;
• you pay for income protection, health or life cover and want to know what you can claim;
• an insurer paid you on a claim, or you paid damages to a client;
• you have staff, a partner or a company, or you're registered for VAT, GST/HST or sales tax;
• the tax office asks about insurance in an audit or compliance check.

Talk to an accountant or a tax adviser in your country, and an insurance broker about the cover itself. This page is general information only. Our freelance contract checklist covers liability and indemnity clauses in client contracts, and our business structure guide covers limited liability.

Related

• Freelance expense tracking
• Schedule C for US freelancers
• UK Self Assessment for freelancers
• Canadian self-employment statement for freelancers
• Cash or accrual accounting for freelancers
• Sole trader, limited company or LLC
• Freelance contract checklist

Sources

• United States: IRS: Publication 334 (2025), Tax Guide for Small Business (page date 30-Apr-2026) · IRS: Instructions for Schedule C (Form 1040) (2025) (page date 30-Apr-2026)
• United Kingdom: GOV.UK: Expenses if you're self-employed, legal and financial costs (page date 2024-11-08) · GOV.UK: Expenses if you're self-employed, office, property and equipment (page date 2024-11-08) · GOV.UK: Expenses if you're self-employed, car, van and travel expenses (page date 2024-11-08) · GOV.UK: Simplified expenses if you're self-employed, vehicles (page date 2020-08-19) · HMRC: BIM45500 - Specific deductions: insurance: contents (page date 2016-04-01) · HMRC: BIM45501 - Specific deductions: insurance: fixed assets (page date 2016-04-01) · HMRC: BIM45510 - Specific deductions: insurance: loss of profits (page date 2018-10-18) · HMRC: BIM45515 - Specific deductions: insurance: professional negligence (page date 2018-10-18) · HMRC: BIM45560 - Specific deductions: insurance: own health policies and own insurance funds (page date 2016-04-01) · HMRC: BIM45565 - Specific deductions: insurance: locum and fixed overheads (page date 2016-04-01) · HMRC: Self-employment (short) notes, Tax year 6 April 2025 to 5 April 2026 (2025–26), a PDF with no page date · HMRC: Self-employment (full) notes, Tax year 6 April 2025 to 5 April 2026 (2025–26), a PDF with no page date
• Canada: CRA: Line 8690 – Insurance (page date 2026-08-31) · CRA: Motor vehicle expenses (not including CCA) (page date 2026-08-31) · CRA: Expenses section of Form T2125 (page date 2026-08-31) · CRA: Self-employed Business, Professional, Commission, Farming, and Fishing Income: Chapter 3 – Expenses (page date 2026-04-16)

Checked 2026-10-19. Found a mistake? Tell us via Support.