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Insurance Rider for Instacart driver


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Client recently started driving for Instacart and obtained a rider on their car insurance policy to cover them while delivering.  They asked if the premium for the rider, which is separately stated, is deductible in full as a business expense.  At first, I thought it is included in the insurance portion of the standard mileage rate, so no additional deduction.  But then I got to thinking that it would be deductible, in addition to the standard mileage rate, since it only covers them while making deliveries and is separately stated, so you know what the amount of additional premium is.

Has anyone else run into this situation and what are your thoughts?

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2 hours ago, BulldogTom said:

He is looking at this post right now.

Geeze, I can't even take a coffee break without getting a notification!

SMR specifically covers car insurance.  Tax deductions are only allowed by legislative grace, I don't know of any exception to the rule in this case.

3 hours ago, Patrick Michael said:

only covers them while making deliveries and is separately stated

Is it required?  Does it cover anything that normal car insurance would not?

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"Is it required?  Does it cover anything that normal car insurance would not?"

WAG. Required is questionable, IC likely does not care, and likely has some sort of self-protection. For the driver, it likely covers business use of the vehicle, which may be specifically excluded on their "regular" policy depending on the insurer.

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4 hours ago, Patrick Michael said:

which is separately stated,

You can refer your client to RP 2019-46. section 4.03 which list the separately stated items that can be deducted in addition to SMR, including parking fees, tolls and interest.

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I looked at IC during the pandemic. Not for me, but I was going to drive our daughter around a few hours a day for grins. There was absolutely no way to make money when looking at the real costs. Break even, maybe, maybe have a little something left for repair fund, but no real profit (business use insurance was an issue). To me, they are the same as all the driving services, preying on those who do not get accounting, with the exception being the commercial (black car and up) drivers who rent a car, are properly licensed and insured, and who work hard for the higher rate. Per mile is a loser.

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I was wondering if the client could get the policy attached to a GL policy instead of the Auto policy.    Even that may be a stretch because it is still auto insurance covered under the Standard Mileage Rate.  I think your client is not going to get the extra deduction for the policy.

Tom
Longview, TX

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From what I know Instacart requires you to have auto insurance.  But most personal policies do not cover you if get in an accident while making deliveries (and many companies do not offer the riders).  Not sure if Instacart checks to make sure you actually have insurance and it covers you while making deliveries.  I am surprised NY, which highly regulates the insurance industry, has not addressed this issue.  

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When I discovered a client's SSN was being used by an "independent contractor" for DoorDash in California, I worried that someone was impersonating him.  I assumed that they required drivers to provide a license and proof of insurance to work for them.  But nothing ever happened beyond the 1099-NEC that DoorDash issued. Now I suspect that all someone has to do is download the app.

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