Personal Car Insurance

• Almost all states require car drivers to maintain some sort of liability insurance. While the cost for maintaining this insurance differs based on a number of factors, there is no tax deduction available to individuals for personal auto insurance costs. The only way to write off your insurance as a business expense is if you use your car for business purposes. You cannot write off your insurance if you only use your car to commute, but can write off some, or all, of the insurance costs as long as you use your car for business.
  
  

Business Use -- Expenses

• While you cannot deduct personal automobile expenses such as insurance, you can make car insurance deductions if you use your car for business purposes. The Internal Revenue Service allows taxpayers to deduct car insurance expenses as an actual expense, according to Bankrate.com. As long as you keep track of your yearly car expenses, including insurance, depreciation, gas, oil, repairs and other related fees, you can include these as deductions as part of your yearly tax return.
  
  

Business Use -- Standard Rate

• If you choose not to keep track of individual expenses such as insurance, you can still deduct the cost of insurance by deducting the standard mileage rate. Each year, the IRS publishes the standard mileage deduction rate you can use to calculate the deductible cost of operating a vehicle based on the mileage you drive. In 2011, for example, the standard rate is 51 cents per business mile, 19 cents for medical or moving purposes miles, and 14 cents for service-oriented or charitable-organization miles. This estimate includes all costs to operate a vehicle, including insurance, gas and other associated expenses.
  
  

Business and Personal

• If you use your car for business and personal expenses, you can still deduct expenses such as car insurance, but only those which you actually use for business purposes. If, for example, you only drive your car occasionally for business meetings, you can only deduct a the portion of your insurance premiums that applies, either as mileage or as a portion of the itemized expenses.