Do Business Owners Receive a Tax Write-off for Commercial Auto Insurance?
Commercial insurance helps business owners protect their investments. The policy helps alleviate your stress so that you can focus on maximizing profits. Business owners are constantly looking for ways to save money. If you operate a delivery service, here’s a look at whether you will receive a tax write-off for your commercial auto policy.
How Commercial Auto Insurance Works
Commercial auto insurance acts similar to traditional auto insurance policies, except it protects any vehicles you use to conduct business. The policy covers you if your commercial vehicle is damaged in an accident. If one of your employees causes an accident, liability coverage will protect your business against a potential lawsuit if someone is injured or their vehicle or property gets damaged. Commercial auto insurance policies help you protect your business. If you add a commercial policy to your vehicle, you should be able to write off part of your insurance when you file your taxes.
If you are using a personal vehicle to commute to and from work, you cannot add commercial auto insurance. If you attempt to add commercial coverage to a vehicle that you aren’t using for business, your insurer may cancel the coverage. Think about how often your vehicle is used and the amount of time you use it for work. If you only use your vehicle to complete the occasional work-related task, you should be covered through your personal auto insurance policy.
Commercial auto insurance is an asset if you use the vehicle to travel to work or as part of delivery service. If you consistently use your vehicle to complete work-related tasks along with your personal use, you can deduct the former expenses when you file your taxes. For example, if you use your vehicle for work-related endeavors 90% of the time, you can deduct that same percentage of the insurance costs when you file your taxes. The only possible exception is if your employer reimburses you for your insurance costs.
What About Possible Losses?
In most cases, you cannot write off car losses on your taxes. There might be room for an exception if a hurricane or wildfire damaged your car. You are also prohibited from writing off a loss if you have been compensated by your employer.
Rideshare Services
If you drive for a rideshare service such as Uber or Lyft, you’ll have to deal with multiple unique risks. Most rideshare companies provide some type of coverage. Generally, you should be able to write off your auto insurance when you are using your personal vehicle to transport clients.
Commercial Auto Insurance Cost
Most commercial auto insurance policies cost around $1,000 per year. Multiple variables could impact the cost of your policy, such as your driving history, credit score, and the type of industry that you are working in. You can save money on your premium by finding discounts, increasing your deductible, and cutting extra coverage.
Other Things to Consider
Make sure that you keep detailed records of your work schedule. You should have at least two years’ worth of records. Be sure to fill out Form 2106 properly on your tax return. Consider hiring an accountant to assist with any tax questions that you may have.
Consult with Remland Insurance
Research your state’s requirements regarding commercial auto insurance. You’ll need insurance to cover your commercial vehicles if you are involved in an accident while driving on the job. If you have any questions about your commercial auto insurance policy, contact the team here at Remland Insurance and we will assist you.
