Can I Deduct Errors and Omissions Insurance?

Professional liability insurance, often called errors and omissions insurance, is a common expense for service providers and consultants. If you are self-employed or run a business, the premiums you pay for errors and omissions or professional liability insurance are fully deductible as an ordinary and necessary business expense. This type of coverage protects you if a client claims your work caused them financial harm, making it a genuine cost of operating a professional service business. The deduction is taken on your Schedule C or on your business return, depending on your business structure. There is no cap on this deduction, so the full premium amount is deductible in the year paid.