Some Commercial Storm Damage May Be Tax Deductible

3/3/2020 (Permalink)

Some Commercial Storm Damage May Be Tax-Deductible

Chicago, IL, has seen its share of storms. Ideally, all the storm damage would be covered by insurance, but in real life, circumstances can leave you with no coverage. Those situations include, but aren’t limited to

Lapse in coverage
Excluded type of damage
No insurance

Occasional Good Reasons for Not Having Insurance
Flood damage is specifically excluded from most commercial insurance policies. It’s usually better to get the added coverage available through the National Flood Insurance Program, but that can be expensive, so the premiums should be weighed against the potential of a flood and the possible losses.
In certain limited cases, having no commercial insurance may be advisable for smaller operations. For example, if a business consists of a sole proprietor who works from home, insurance for their business makes no sense.
A lapse in insurance can come from several sources. It’s not unusual to forget to send in a check – a situation often discovered at a bad moment indeed. However, a check really can, just like the old joke, get lost in the mail, also leading to a lapse. Hopefully, your insurance company will notify you if that happens.

Uninsured Damage to Businesses May Be Tax Deductible
If your business does have insurance, but you choose not to file a claim, that may complicate writing the damage off your taxes. For homeowner’s insurance, whether you can write off storm damage is quite complicated. However, business casualty losses are usually tax deductible.
To qualify, the damage must be from an identifiable event, such as severe thunderstorms, wildfires or floods. You need to save all your receipts and, if you have insurance, be able to show the loss wasn’t covered by the company.
One additional possible benefit is that major catastrophes may be declared a disaster by the federal government. In those cases, businesses may be allowed to write off the losses for the present tax year or the next – whichever is more advantageous for the company.
Once you have serious storm damage, call a professional restoration company to inspect and protect everything left. This should be done as soon as possible to avoid further loss.