Can I Pay My Car Insurance Through My Business?

As a business owner, you may be wondering

Can I Pay My Car Insurance Through My Business?

As a business owner, you may be wondering if it’s possible to pay your auto insurance through your company rather than your personal expenses. Depending on the type of coverage you have, you can pay business car insurance through your company – here’s how it works.

What Is Business Car Insurance?

Business car insurance, or commercial auto insurance, is a type of business insurance policy. You need it if you have a car – or any other type of vehicle – which you use for business-related purposes. 

Business-related purposes include:

  • Driving to a job site on a daily basis
  • Using your car to instruct learner drivers
  • Driving to sell goods or services 

Whether you’re a salesman, a plumber, or a real estate agent, you could benefit from commercial auto insurance.

Business Car Insurance Coverage

While the exact coverage depends on your policy, commercial auto insurance typically protects you against risks such as:

  • collision-related damage
  • property damage
  • personal injuries

If you have more comprehensive coverage, you might also be protected against theft, vandalism, and uninsured drivers. You may also need other coverage, such as business liability insurance.

Is Business Car Insurance the Same as Personal Auto Insurance?

While there are similarities, they are not the same product. 

  • Commercial auto coverage: Business car insurance policies cover property damage and bodily injuries sustained during work-related driving. It can also protect you if an employee causes an accident or there’s a personal injury claim made against your business.  
  • Personal car insurance: Personal auto insurance covers the costs if you’re in an accident while driving for personal or leisure purposes. You typically need auto insurance to legally drive a vehicle in the US.

If you have a car you use for personal and commercial purposes, you can update your insurance coverages to ensure you’re fully protected.

Car dealer pointing to where a buyer should sign the paperwork to take the black keys sitting on top of the document

Can I Put Car Insurance Through My Business?

There’s a simple answer to this: yes, if it’s your business and you use the car for work-related purposes. 

In tax terms, car insurance is considered an essential vehicle expense. So, you can claim the costs of insuring the car just as you can often claim the costs of:

  • fuel
  • car repairs
  • leasing
  • registration fees

The exact costs you can claim depend on how you calculate your expenses. 

For example, if you only use the car for business purposes, you might base your figures on actual expenses e.g. how much you actually spend on the vehicle per month. On the other hand, if you use your car for business and personal purposes, you might use the standard mileage rate method instead. 

In both cases, though, you can put the costs of your business (not personal) car insurance through your company’s expenses.

So, Is Business Car Insurance Tax-Deductible?

Yes! In many cases, it’s possible to deduct all of your car insurance premiums from your taxes. There are some caveats, though. 

  • You need to use the vehicle for genuine business purposes. Commuting does not count towards business use. 
  • For the most part, employees can’t deduct auto-related expenses from their taxes. There are exceptions for certain government officials, Armed Forces Reservists, and performing artists.

Can Sole Proprietors Deduct Car Insurance?

Yes. However, you still need to use the car for business purposes to deduct the insurance from your taxes. As with other self-employed individuals, here are some examples of “business purposes”:

  • Driving to meet a client.
  • Traveling in your car to a job site to inspect work.
  • Driving around town to deliver goods as part of a contract. 

Your regular commute is not considered a business purpose. So, unless you use your car to perform job-related tasks, you can’t claim business expenses or tax deductions for the vehicle.

How Do I Write Off Car Insurance for Business Vehicles?

If your car insurance is tax-deductible, you can claim it one of two ways. 

  • You use the car solely for business purposes: You can deduct all or actual car expenses, including the insurance premiums.
  • You use the car for business and personal use: Deduct based on the miles you drove for work-related purposes (the standard mileage rate). 

You will typically need evidence to support your claim for tax deductions. Track your mileage, keep receipts for relevant costs e.g. fuel and repair bills, and hold onto any other records which support your expenses claim.

How do you deduct your car insurance? It depends on if you’re self-employed or not.

If you’re unsure whether you can claim tax deductions – especially if you’re an employee rather than a business owner – seek legal advice first.

Get Business Car Insurance Quotes

If you’re insuring a car through a business, don’t just take the first quote you find. Instead, shop around for the best deal for you. At InsurePro, we will match you with a range of competitive quotes and help you enroll quickly – so you can focus on running your business.

Looking for business car insurance? Get the best commercial auto insurance for your business now!