Money Doesn’t Come Without Guidance ...
As per ATO (Australian Tax Office), now all the GST registered businesses can claim credits for the insurance premium. If you hold an insurance policy for an asset which you use in your business, then you can claim credits on the GST included in the premium either partially or fully depending on how you use the asset in your business. If you use the asset, wholly for business purpose, then you can claim full GST credits, whereas if you use the asset both for business and personal purpose, then you can claim GST credits for the portion which you use for business purpose.
You need to notify your insurer before making the claim that you run a GST registered business and the portion that you claim as GST credits or else you may have to pay GST when your claim is settled and you lodge an activity statement. The settlement amount is based on the terms of the contract and not on the GST legislation. Nevertheless, usually, the insurer will safeguard you only for the actual loss which is the loss minus the amount of GST credits which you can claim for the repair or replacement cost of the item/s insured.
For instance, you have a car which you use ten percent for business purpose, your business is GST registered and you have insurance on your car. Now you have to repair your car which is covered by the insurance. The repair amount is $6,000 where you can claim GST credits of $600, thus your insurer will pay you $5,400.