Liability, E&O, and property insurance are fully deductible — but vehicle and home insurance belong on different lines. Here's how to get it right.
Know exactly what belongs on Line 8690 — and what the CRA says doesn't qualify.
Special CRA rules and percentage limits that apply to insurance.
Life insurance premiums are generally not deductible. The one exception is when a financial institution requires you to assign a life insurance policy as collateral for a business loan. In that case, the premiums may be deductible.
Interpretation Bulletin IT-309Vehicle insurance is part of your total motor vehicle expenses on Line 9281, not Line 8690. It is then multiplied by your business-use percentage.
Home insurance for your workspace is claimed in Part 7 (Line 9945) of the T2125, calculated as a percentage of your total home costs based on workspace area.
If you have a policy that covers both personal and business property, you must allocate and deduct only the business portion. Keep documentation showing how you calculated the split.
See how different professionals use Line 8690 deductions in practice.
Paid annual commercial general liability insurance to cover on-site accidents and property damage.
$3,200
$3,200 (100%)
Renewed Errors & Omissions insurance required by the provincial real estate regulator.
$1,850
$1,850 (100%)
Purchased product liability coverage for handmade items sold through an online store.
$480
$480 (100%)
These errors on Line 8690 can trigger a CRA review — here's how to get it right.
Claiming vehicle insurance on Line 8690 instead of Line 9281
Vehicle insurance belongs under Motor Vehicle Expenses (Line 9281), where it is multiplied by your business-use percentage. It should never appear on Line 8690.
Claiming home insurance on Line 8690 instead of Part 7 (Line 9945)
Home insurance for your workspace is claimed in Part 7 (Line 9945) of the T2125, proportional to your workspace percentage of total home area. Do not put it on Line 8690.
Trying to deduct life insurance premiums
Life insurance premiums are not deductible unless a financial institution requires the policy as collateral for a business loan (per CRA interpretation bulletin IT-309).
These categories are often mixed up with Insurance. Here's the difference.
Vehicle insurance belongs on Line 9281, not Line 8690. Only non-vehicle business insurance goes here.
Home insurance for your home office is claimed in Part 7 (Line 9945), proportional to your workspace percentage. It does not belong on Line 8690.
See how ScanForTax processes a typical insurance expense.
Intact Insurance
2025-01-15
Ontario
ScanForTax identifies this as a business insurance premium and categorizes it under Insurance (Line 8690). The $312.00 HST is recoverable via ITC. Note: if this were vehicle insurance, it would go to Line 9281 instead.
Profession-specific guides that frequently use Insurance deductions.
See how tax recovery works for insurance expenses in each province.
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